Difference Between Endowment Plans and Money-Back Plans

As we grow old and reach our retirement age, we need the kind of money so that we can live the rest of life without worrying about our finances. The bank balance should be enough that even if we fall sick and have to be hospitalized, we do not have to compromise on medical treatment. This is why people put their money in various types of investment plans.

As we talk about investment plans, the two types are quite popular these days such as endowment plans and money-back plans. However, before we end up buying any one of them, let us delve deeper and discuss money back plan vs the endowment plan.

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What is an Endowment Plan?

It is a type of life insurance policy that is particularly designed for paying a lump sum amount of money after a certain duration, either on maturity or after the demise of the policyholder. This kind of plan is perfect for people who want to put their money into long-term investment options. If you have been making plans for your child’s marriage or retirement, or any such future events, you can definitely go for an endowment assurance plan. However, you need to be aware of the fact that the premium to be paid for an endowment plan is mostly high. The sum assured you will get after the policy ends will be higher too.

Also Read: LIC Premium Receipt Download

What is a Money Back Insurance Plan?

A money-back plan is also a type of life insurance policy. Unlike an endowment plan, in a money back policy, you will get a certain percentage of the sum assured at regular intervals. If you are the kind of person who wants to safeguard his/her life along with making investments in a way that you get an amount of money on regular basis at particular intervals, then a money-back insurance plan is the right choice for you. A money-back plan comes in the short-term investments category.

Know More: Can I Get My Insurance Premium Back Under A Money Back Plan?

Difference Between Endowment Plan and Money Back Plan

The basic difference between these two types of plans is that an endowment plan is a long-term plan, while a money-back plan is a short-term plan. In an endowment plan, the sum assured and bonus are offered after maturity or in the event of the death of the policyholder. On the demise of the policyholder, the nominee receives the sum assured and the applicable bonus. In a money-back plan, a percentage of the sum assured is paid at a regular interval to the policyholder.

To make things even clearer, here are some more differences between the endowment plan vs money back plan mentioned below:

Also Read: Best Insurance Policy for Child

If you are new in the world of investments, you must have a thorough knowledge of both money-back plans as well as endowment plans. Knowing both of them properly will help you to make up your mind and choose a particular one.

As we talk about an endowment policy, we need to know that there are many types of endowment plans available in the market. If you invest your money in an endowment plan, you would be required to make payments for premiums frequently. A percentage of the premium amount is then used for buying a life insurance scheme. The rest of the amount is invested in a type of plan that can either be profit-based or non-profit-based. If it is a profit-based type of plan, you might even get to take part in the profits of the company.

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