Comparison: Endowment Plans Vs Money Back Plans

In an Endowment policy, If you die during the endowment policy term, the family will get the death benefit (sum assured). If you do not die during the policy term, you will get back the premium that you had contributed to the insurance company.

In the case of a money back life insurance policy, the insurance company will pay money at regular intervals as per the terms and conditions of the policy.

Endowment and money back policies provide savings. However, there are a few small differences between these two life insurance products. You should understand these differences in order to buy the best insurance plan in order to secure your future.

Benefits Of Endowment Plans

• If the policyholder survives the term, the sum assured and the bonuses (if any) will be paid to the policyholder. The payment will be made at the end of the term.
• In case of death of the policyholder, the sum assured and the bonuses are paid immediately.
• Endowment plans work by accumulating wealth over a long-period of time. The money invested in the form of an endowment policy will cover the risk to your life and provide you with a lump sum at the end of the term as well. The returns are useful for children’s marriage or education-related expenses.

Benefits Of Money Back Plans

• The policyholder will get a fixed percentage of the sum assured at regular intervals. The balance sum assured and bonuses (if any) will be paid at the end of the term.
• If the policyholder dies during the policy period, the sum assured will be paid to the nominee or beneficiary along with the applicable bonuses.
• The money back policy is ideal to fulfill your short-term financial goals. The key events in your children’s lives such as marriage and education will be borne by the insurance policy.

What Should You Choose?

If you are interested in buying a money back or endowment policy, you should compare various policies and their returns. You can go through the official website to understand the bonus earning potential so that you can maximize the yield. As per the directions of the IRDAI (Insurance Regulatory and Development Authority of India), the life insurance company should provide complete information about the policy and its returns so that customers can choose the best policy as per their needs.

Conclusion

An endowment policy offers death benefit, maturity benefit and participation in profits of the insurance company as per the terms and conditions mentioned in the insurance policy. You can also get optional death and disability benefits by purchasing an endowment policy. You can choose a money back plan if you require a regular flow of money over a period of time. However, the returns will be lesser than in an endowment policy. You can choose various riders to enjoy special benefits and to cover the risk to the optimum potential extent.

Also read: 5 Things to Consider When Buying Endowment Policy

Should You Choose An Endowment Plan Or A ULIP?