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Differences between Money Back Plan and Endowment Plan

Published On Aug 01, 2021

A policy buyer is forever in search of a plan that offers both life cover as well as a savings instrument. However, choosing a right insurance plan from a wide variety of insurance plans available is a difficult task. Such plans also include a money back plan and endowment plan. Let us understand about both these plans in detail alongside the differences between two plans.

What is a Money Back Insurance Plan?

A money back policy is a kind of life insurance plan that is specifically designed to pay a part(percentage) of sum assured at regular intervals rather than paying a lump sum amount in the event of death or maturity. People who wish to safeguard their life alongside investment in a way that they receive an amount on a regular basis at intervals should consider buying a money back insurance plan. It is a helpful plan when it comes to short term investments.

What is an Endowment Plan?

An endowment policy is a type of life insurance plan which is specifically designed to pay a lump sum amount after a specific time duration on maturity or in the event of death. It is an ideal plan for investors who are looking for long term investment options. Individuals who are making plans for future events such as their children’s marriage, retirement plan can choose an endowment plan. It has a high premium amount yet it also pays you a good sum assured towards the end of the policy duration.

Money Back Plan V/S Endowment Plan

The major difference between a money back plan and endowment plan is that in a money back plan, an individual receives a specific sum assured percentage at regular intervals. While talking about an endowment policy, an individual receives the sum assured and bonus at the end of the policy term. In the event of unforeseen death of the policyholder during the policy term, a death benefit is received by the nominee in the form of sum assured and bonus applicable.

Some of the common differences between a money back plan and an endowment plan are listed below:


Money back Plan

Endowment Plan


It is an insurance as well as an investment plan, wherein the policyholder would receive money at regular intervals.

It is both an investment and insurance policy, wherein the policyholder receives a death benefit  at the completion of the policy duration.

Policy Tenure

It ranges between 5 years to 25 years.

It ranges between 10 years to 35 years.


A specific sum assured percentage is paid at regular intervals.

Payment of sum assured and applicable bonuses is done after the end of policy duration.

Loan Facility

This plan is not subject to any type of mortgage as a part of the sum assured is constantly reduced.

This plan can be used as a security to get a loan.

At the End

We hope that the afore-mentioned facts would help you in making a decision between a money back plan and endowment plan. Therefore, you are free to opt for a life insurance plan based upon your individual requirements and budget.

Also read 

Term Insurance Plans Or Money Back Plans? Which Is Better?

Tax Benefits In Money Back Insurance Plans

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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