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Difference Between Money Back Plan and Endowment Plan

Published On Mar 02, 2021 12:00 AM By InsuranceDekho

Money Back Life Insurance Plans are different than Endowment Life Insurance Plans. Though they both are considered as insurance cum savings plans, they both are not like alike. to understand how these two plans are different from each each other lets learn more about each one of the plans.

Key Highlights of An Endowment Policy

If you die during the term of this policy, your family gets an assured sum which can be claimed. But if you do not die during the term of this policy then you will get the premium that has been contributed by you to the insurance firm.

What are the Benefits of Endowment Policy?

  • A policyholder that survives the term of this policy will get the assured sum along with bonuses (if any). The payment will be made after the term ends.
  • Accumulation of a person’s wealth is taken into consideration over a long period. The money invested in this policy will ensure to cover your life’s risk while you also receive a lump sum at the end of the term.
  • The returns from the endowment policy are very beneficial for your child’s marriage or educational fees.
  • In case, the policyholder doesn’t survive the term, then the assured sum along with the bonuses will be paid immediately.
  • Here the policyholder will avail various benefits that include loans, maturity, death and income tax.

What are the Major Aspects of Money Back Plans?

As far as the money-back plans are concerned, the policyholder gets money from the insurance company at regular intervals as mentioned in the terms and conditions of the policy.

You May Also Like To Read:- Reasons to Purchase a Money Back Life Insurance Plan

Understanding the Benefits of Money-Back Policies

  • At regular intervals, the policyholder will get an assured sum as promised by the insurance firm. If there are any bonuses, they will be paid at the end of the term along with the balance sum assured.
  • If you have short-term financial goals, they can be fulfilled with a money-back policy.
  • It can also be used to cover expenses for your child’s marriage or education.
  • If the policyholder doesn’t survive during this period, the assured sum will be given to the nominee along with all the bonuses applicable.
  • Here, the policyholder will avail benefits like death, survival and bonus.

Difference Between Endowment Policy and Money-Back Policy

  • The tenure for an endowment is anywhere between 10 to 35 years while on the other hand, the tenure for a money-back policy is from 5 to 25 years. 
  • The endowment can be used as a security to get a loan while the money-back policy cannot be subjected to any mortgage; some part of the sum constantly gets deducted.

Factors To Consider While Choosing Between Endowment Policy and Money-Back Policy

Since you are buying a policy for the very first time, we recommend you to be aware of the expectations as well. There are a few factors that you ought to know before choosing the right policy for your financial needs. We have listed out some of these factors below so if this interests you please continue reading below.

1. Determination of your needs

You need to know why you intend buying a policy. Are you seeking to fulfil a long-term goal or a short-term goal? Well, based on that, you can decide if an endowment or a money-back policy will be beneficial for you.

2. Your budget

How much are you willing to invest in the policy? Look at your budget and decide what amount you are willing to shell out. Once you make up your mind, you can fairly choose between a money-back policy and an endowment policy.

3. Consider the aspects and benefits

You shouldn’t forget to consider the features and benefits of a policy before you decide to opt for it. Make sure it is truly going to benefit your needs over time.

You need to do in-depth research on the types of policies and investments that are available today. With the right information in hand, you can make the right decision.

Also Read: What are Money Back Plans? How do Money Back Plan Works?

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