Which Is Better, Money-Back Or Endowment Plan?
Updated On Jul 23, 2021
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An Endowment plan and a monkey-back plan come under an umbrella term, life insurance policies. They have a few differences which contribute to choosing a better suitable policy.
A life insurance policy where the policyholder's life is covered and where the life assured is helped to save money for various events in life over some time is called an endowment plan.
Money-back is essentially an endowment plan with the benefit of liquidity. Instead of getting a lump sum amount in the end, in money back, the life assured receives a proportion of the sum assured at regular intervals of time.
Which Is Better, Money-Back or Endowment Plan?
Key components to consider while comparing Money-back and Endowment plans are as follows -
1. Term and Maturity Benefit
| Endowment Plan | Money Back Policy |
| The assured receives the sum assured if they survive the term of insurance. No payments are to be made during the term. | In money-back, the life assured gets to receive a portion of the sum assured at specific intervals of time during the term of the plan. If the policyholder survives the term, the remaining sum assured with bonuses is paid to the assured. |
2. Tenure
| Endowment Plan | Money Back Policy |
| The general tenure of the Endowment policy is 10 to 15 years. | Money-back policies mostly accompany a tenure of 20 to 25 years. |
3. Loan Facility
| Endowment Plan | Money Back Policy |
| Since the sum assured is paid as payment only at the time of maturity, an endowment policy is often used as a security to get a loan. | As some of the sum assured is consistently deducted during the term of the policy, a loan can’t be taken out against a money-back plan. |
4. Payout Interval of Different Benefits
Endowment Plan
- If the policyholder survives the term, the sum assured and the bonuses will be paid to the policyholder. The payment will be made at the end of the term.
- In case of the death of the policyholder, the sum assured to the nominee and bonuses will be paid right away.
Money Back Policy
- The policyholder gets a fixed portion of the sum assured after a period of time at regular intervals as survival benefits.
- If the policyholder dies during the policy term, the nominee will receive the sum assured and bonuses.
5. Death Benefits
Both the Endowment and Money-Back Plans will give the guaranteed amount back along with the bonuses when the life assured suddenly departs. In a money-back plan, if the life assured departs, the dependent receives the entire sum irrespective of the premium installments paid.
6. Investment Risk Level
The risk factor in the Endowment Plan is comparatively lower than that in the money-back plan. The survival and death benefits are usually greater in the Endowment plan than in the money-back plan.
Conclusion
To sum it up, an endowment plan offers death benefits, maturity benefits, better risk factors, better maturity, survival, and mortality benefits when compared to a money-back plan, and policy profits of an insurance company. Optional death and disability benefits are also available in the Endowment plan. On the other hand, a Money Back policy offers to provide a portion of the sum assured at specific intervals of time. Money-Back can be chosen for short-term goals. Nonetheless, the returns will be lower than the endowment policy in the money-back policy. In recent times, many have stated that the Endowment policy is slightly better than money-back.
Also Read: Significant Components of A Money Back Plan
How to Check the Status of Your Money Back 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.
