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Aspects That Make Endowment Policies Different From Money Back Plans

Updated On Oct 27, 2021

Savings are available through endowment and money-back schemes. These two life insurance products, however, have a few minor distinctions. To get the finest insurance plan, you need to be aware of these distinctions. 

Key Features of Endowment Plans

The death benefit is paid to your family if you die while the endowment policy is active (sum assured).
You will receive a refund of the amount you paid to the insurance provider if you do not die during the policy term.

Key Features ofMoney-Back Plan

In the case of a money-back life insurance policy, the insurance company will pay money at regular intervals following the policy's terms and conditions.

Aspects That Make Endowment Policies Different From Money Back Plans

Below are a few aspects that make Endowment Policies different from Money Back Plans:

1. Comparison Of Insurance Products 

If you're thinking about purchasing a money-back or endowment policy, you should examine the different policies and their returns. You may learn more about the extra earning potential by visiting the official website. The IRDAI (Insurance Regulatory and Development Authority of India) has directed that life insurance companies offer detailed information about their policies and their returns so that customers can select the best policy for their needs.

2. Purpose Of The Insurance Policy

Risk is covered by a pure insurance policy. You should not consider it from an investing standpoint if you want to cover the risk to the utmost extent possible. A life insurance policy's sole objective is to compensate for financial loss. Because death cannot be avoided, you should take precautions to provide stability to your family or dependents. After the breadwinner dies, the financially dependent children, spouse, and parents should have access to funds. Pure insurance coverage will provide advantages. Even if you can't help them with the emotional pain, you can make sure they don't suffer financial hardship by using an app.

3. Types Of Bonuses

You'll be eligible for guaranteed bonuses and various types of bonuses depending on the insurance company's success, according to the policy terms. 

Additional Bonus (FAB) - You will be eligible for FAB if you subscribe to a policy for a lengthy period of time, such as 15 years. The bonus amount will be calculated and paid simultaneously with the sum assured at the end of the insurance term. Policyholders who retain loyalty for a sufficient amount of time, as determined by the insurance company, are eligible for additional loyalty benefits. For every 1000 rupees of the cash assured, the bonus will be calculated.

Reversionary Bonus - A reversionary bonus is a simple benefit offered by the insurance provider in conjunction with an endowment policy. The insurance provider will declare a bonus for every thousand rupees of premium paid by the policyholder on an annual basis. The bonus can be received at any time during the life of the insurance policy, including at maturity, claim, or surrender. On the company's official website, you may locate the bonus amount. The simple reversionary bonus does not compound and will remain unchanged until the final payout date.


According to the insurance policy's terms and conditions, an endowment policy provides a death benefit, a maturity benefit, and a share of the insurance company's earnings. By obtaining an endowment policy, you can get optional death and disability payments. If you need a consistent flow of money over a long period, you can choose a money-back plan. The returns will, however, be lower than those of endowment insurance. You can select from several riders to receive additional advantages and ensure that your risk is covered to the fullest extent possible.

Also read - Top 5 Benefits Of Buying Endowment Policies

Things to Know About Endowment Policy

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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