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Difference Between Endowment Plan and Money Back Plan

Published On Jun 18, 2021 9:07 PM By InsuranceDekho

What is an Endowment Plan? 

Endowment Plan is a  traditional non-participatory life insurance plan. It is the percentage of the sum assured along with the additional bonuses on attaining maturity or in case of death. These plans are specially designed for those policyholders who want to have long term investment. These plans include higher premiums which leads to an increase in the amount of sum assured received on maturity. Endowment Plans are for those policyholders who are planning for long term financial goals such as retirement plans, marriage of their children, etc.

What is a Money Back Plan?

Money Back Plan is a participating investment cum insurance plan. Money Back Plan pays you the guaranteed returns at periodic intervals during the policy tenure. The plan provides a sum assured as a lump sum amount along with the bonus on maturity or in case of unfortunate events. It is a short term investment plan. 

Money Back Plans help policyholders to create Financial protection shields for their loved ones during financial instability. It is an ideal solution for those who are looking for such plans that can provide life cover along with creation of wealth. There are certain features that make it a good investment plan such as regular flow of income, low risk investment, tax benefits, wealth creation, insurance coverage, loan facility, etc. 

In this article we will help you give a clear understanding regarding the endowment and money back plans

Difference Between Money Back Plans and Endowment Plans

An Endowment Plan pays you the lump sum amount assured at the end of the policy tenure whereas the Money Back Plan pays the lump sum amount assured at regular intervals during the policy tenure. Amount received at periodic intervals is known as the survival benefits which are equal to the percentage of sum assured.

Endowment Plans and Money Back Plans offers the policyholder with life cover and creation of wealth. Money Back Plans do not provide any kind of loan whereas Endowment Plan can be used as a security to facilitate loans on most of the available plans. Endowment Plans tenure are between 5 to 25 years whereas Money Back Plans tenure are between 10 to 35 years. 

Both Endowment and Money Back Policy  pay the sum assured amount and additional bonuses, if unfortunately the policyholder dies during the term of the policy. On death,in a Money Back Policy regardless of the sum assured paid out during the tenure, the wholesome amount assured is paid. 

This makes the Money Back Policy a little costlier. Money Back Policy is a good plan for those people who require regular flow of income to meet short term goals such as household expenses i.e. electricity bills, school fees of children and many more whereas Endowment Plans are for those who are looking for long term investment towards achieving the long term goals. 

Risks associated with Endowment Plans and Money Back Plans are very less as compared to other plans. 


Money Back Policy gives you returns at continuous  intervals throughout the policy tenure, so that you can fulfil your short-term goals. On the other hand, an endowment plan helps you to save a wholesome big amount that you can attain at the maturity of the policy. Both plans are good. It just depends on your goals which will make your investment a fruitful investment. 

Also read 

How The Money Back Policy Works?

Key Advantages of Money Back 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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