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Examine Money Back With Endowment Plans

Published On Feb 25, 2022

A money-back plan is different from an endowment plan in that an individual receives a fixed sum assured percentage at regular intervals. When it comes to endowment policies, at the end of the policy period, a person receives the sum promised as well as a bonus. If the policyholder dies unexpectedly during the policy period, the nominee receives a death benefit in the form of an amount assured and a bonus. A policy buyer is always looking for a plan that combines life insurance and a savings account. However, choosing the best insurance plan among the many possibilities available is a difficult task. An endowment plan and a Money Back plan are two examples of such agreements. Let's take a closer look at both of these designs, as well as the differences between them.

Money Back Plan vs. Endowment Plan

The main difference between a money-back plan and an endowment plan is that a money-back plan pays a specified sum assured percentage at regular periods. An individual receives the sum promised as well as the bonus at the end of the policy period when considering endowment insurance. The nominee receives a death benefit in the form of the sum assured plus any relevant bonus if the policyholder dies unexpectedly during the policy period.
Some of the significant differences between a money-back plan and an endowment plan are as follows:

1. Term and Maturity Benefits

At maturity, the policyholder is paid the sum insured plus any relevant bonuses if the policyholder lives the period. For the length of the plan, no payments are required. Throughout the policy, the policyholder will receive a percentage of the sum insured at predetermined periods. The balance of the insurance, as well as any relevant incentives, are guaranteed if the policyholder lives to the end of the term.

2. Death Insurance

Both endowment and moneyback policies will pay the promised sum plus any relevant incentives if the policyholder dies within the life of the contract. In a Money Back insurance, the full sum promised is paid out on death, regardless of the instalments already paid out. As a result, MB plans have increased in price.

3. Applicability or Suitability

Endowment policies are appropriate for consumers who desire to build up assets for long-term financial goals including homeownership, paying for their children's school or marriage, retiring, and so on. People who need a constant stream of income to accomplish short-term financial goals like EMIs, school fees for their children, home costs like rent or other bills, and so on may consider a money return insurance.

4. Loan Facility

Because the money assured is only paid as a lump sum at maturity, endowment insurance can be used as collateral to get a loan. Because a proportion of the sum assured is regularly deducted over the term of the policy, a loan cannot be secured against a money-back plan.

5. Premium And Risk

The risk of either approach is small, given the advantage of survival/maturity. Premiums for endowment and money-back policies are greater than normal term insurance for the same reasons.


As we have seen, endowment schemes do not provide high returns. Returns on money-back programs are substantially lower. Money-back programs, on the other hand, have pre-determined financial goals. Money return systems are designed to earn income at regular periods to fulfill predefined expenses. Before investing in an endowment or a money-back plan, investors should assess their financial status. We'll look at how reinvesting money received over the policy term can help us earn higher returns on money-back plans in the future post.

Also Read: Learn Everything About Money Back 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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