Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin
  Hurry Up!
Save tax in 80C by purchasing a Life Insurance Today View Plan

Understanding The Difference Between Money-back Plans And Endowment Plans

Updated On Sep 10, 2021

An endowment plan is simply a life insurance policy that provides the life assured individual with life insurance coverage while also allowing them to save money on a regular basis throughout the policy's term. When the assured person lives longer than the policy's term, the assured person will receive a cumulative amount upon maturity.

In a money-back plan, rather than receiving the lump sum at maturity, the policyholder will receive a portion of the amount promised at periodic intervals as a wonderful return on investment. If the life assured lives to the end of the policy term, the policy becomes similar to an endowment policy, but with the added benefit of periodic and explicit payouts.

While both endowment plans and money-back policies serve the same goal as a whole life insurance policy, there are key differences between the two.

Differences Between Money-back Plans And Endowment Plans

Here are some key differences between endowment and money-back plans to help you make an informed decision:

  • Term And Maturity Benefit

The amount guaranteed and appropriate rewards are given to the life assured person at the time of maturity if they outlive the insurance term in an endowment plan. During the endowment plan, there are no provisions for making payments.

A money-back policy, on the other hand, pays out a portion of the sum assured at predetermined intervals throughout the policy term. Furthermore, if the policyholder outlives the policy term, the assured person will get the remaining sum assured at maturity.

  • Benefits Of Mortality

If the assured individual leaves within the policy's term, the endowment policy, and the money-back plan will pay the promised amount plus appropriate bonuses. In a money-back plan, however, in the event of the policyholder's death, the entire sum assured is paid to the life assured person's dependents, regardless of the premium installments paid.

This is the element that distinguishes an endowment from a money-back plan, and it is also the reason that a money-back plan is slightly more expensive.

  • Suitability

Individuals who want to save money for all of their long-term financial goals, such as buying a house, paying for their children's higher education, or retiring, may consider an endowment plan.

Money-back insurance, on the other hand, is ideal for people who require a consistent income stream to meet all of their short-term financial goals, such as paying EMIs, home bills, children's school fees, and so on.

  • Uncertainty

When compared to a money-back policy, the risk associated with endowment programs is rather modest. In addition, the survival and mortality benefits of an endowment plan are greater, and at a smaller premium installment.


A money-back policy staggers the investment benefit during the policy term at regular intervals, whereas an endowment policy pays the investment benefit at the conclusion of the policy period. Traditional policies usually include a money-back guarantee. A money-back plan, like a participating plan, links the investment benefit to the performance of the underlying participating fund and distributes it in the form of yearly bonuses, staggers the payment of the sum assured at regular intervals throughout the policy term, and pays the sum of bonuses at maturity. 

People frequently state that they have purchased an endowment insurance plan or that they own a money-back policy. Both are bundled life insurance policies that provide savings as well as life insurance, and both are tax-deductible. However, there is a significant distinction between the two, and that is the structure of the maturity benefits.

Also read: Which Is Better Term Insurance Or Endowment Plan?

How Can I Calculate Surrender Value For My Endowment 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.    

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 50 Lacs+ happy customers
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.