Difference Between Money Back and Term Insurance Plans
Updated On Oct 13, 2023
Table of Contents
What is a Term Insurance Plan?
Term insurance plan offers a sum assured to the nominee or the family members of the life assured in case of an unfortunate demise of the life assured during the policy term. This type of life insurance plan ensures your family has enough financial resources to maintain a healthy lifestyle in your absence. Term plan helps your family become financially independent. Term plan is a type of life insurance insurance policy that promises to offer you high insurance coverage with a minimum premium amount.
Also Read:- What Do You Need To Know Before Buying A Money Back Policy?
What is a Money-Back Plan?
Under a money-back life insurance plan the life assured receives a survival benefit amount at different stages of the life insurance policy. In case the life assured passes away during the policy term, the sum assured is paid to the nominee even after the policyholder has already received periodical survival benefits. The survival benefit amount is equal to a pre-decided percentage of the total sum assured. Survival benefits are paid out at fixed intervals during the policy term, till the time of maturity after the premium payment term ends. Under money-back plan, at the time of maturity, the sum assured is provided to the life assured after deducting the periodical survival benefits. In case the life assured passes away during the policy term even after receiving the periodical survival benefit the total sum assured without deducting the periodical survival benefit is paid to the nominee.
Difference Between Money Back and Term Insurance Plans
Following are the differences between money back and term insurance plans:
|
Parameters |
Money Back Plan |
Term Insurance |
|
Benefits |
Death benefits, Maturity Benefit, and Survival benefits are paid under money back plan. |
The death benefit is paid. Some term insurance plans also offer maturity benefits. |
|
Bonus |
Usually money back plans are participating plans i.e. bonus may be declared upon the policy. |
Term Life policy are non-participating plans i.e. bonuses are not declared upon the policy. |
|
Mode of Benefit Payout |
The lump sum amount is payable at regular intervals. |
The death benefit is payable as a lump sum or as monthly installments under term life policy. |
|
Premium Rate |
High premium rate. |
Affordable premium rate. |
You May Also Like to Read:- What Are Money-Back Plans? How Do They Work?
