- Understanding the Plans
- Key Similarities
- Key Differences
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Updated on Aug 07, 2023 4 min read
Endowment vs Money Back Policy
If you are getting life insurance for the first time, you will come across different types, such as Term Insurance, Endowment Plans, and Money Back Policies. Each has its own benefits and limitations, so it’s important to understand them before making a choice. Term Insurance offers pure life coverage, while Endowment Plans and Money Back Policies combine insurance with savings. The main goal of life insurance is to provide financial security with an affordable premium.
Endowment Plans and Money-Back Plans
A plan that provides life coverage and also acts as savings are always liked by the policy buyers. But selecting from a number of insurance plans is a hectic task. The endowment plan and money back insurance plan to contribute to such plans.
Nevertheless, there are several similarities as well as differences between the two. One can opt for any of the plans depending upon their preferences. Here are a few of the comparisons made between the two plans.
What Is Endowment Plan?
An endowment plan is a life insurance policy designed to pay a lump-sum amount after a fixed time period on maturity or in case of death.
The Endowment Plan is for those investors who want to have long term plans. People who are planning for future events like a retirement plan or the marriage of their children can opt for the endowment plan. This plan has higher premiums but it also pays you a handsome assured amount at the completion of the policy term. This secures both, the savings and provides insurance to the policyholder. 
What Is Money Back Plan?
Money-Back Plan is a life insurance policy designed to pay a percentage of sum assured at regular intervals instead of the lump-sum amount in case of maturity or death. It is an endowment plan with the benefit of liquidity.
Whereas all those who want to protect their lives along with investment in such a way that they get an amount regularly at intervals should opt for Money-Back Plan. This plan is helpful in short term investment like an admission of your child in college for a particular course. The amount of money paid at intervals brings motivation to the policyholder for planning small family activities and boosts him up in progressing in life with the help of regular income. So, those individuals having such plans can opt for Money-Back Plan.
Similarities In Endowment Plan & Money-Back Plan
An endowment plan and money-back plan both are the types of life insurance plans. Both plans provide maturity and death benefits. The policyholder can use this plan both as an investment plan and an insurance plan.
Moreover, the sum assured is paid both in case of death and survival in the endowment plan. Because of the additional features provided by both, the premiums are higher than normal plans. Both the plans are not dependant on market like ULIPs. The risk in both the plans is a bit low because the amount the policyholder invests is on a fixed rate which is agreed beforehand at the time of buying the policy.
Differences In Endowment Plan & Money-Back Plan
The difference between the endowment plan and money back plan is that in the endowment plan one gets the sum assured and the bonus at the completion of the maturity period. Whereas in a money-back plan the policyholder gets a percentage of sum assured at regular intervals. The death benefit is in the form of the sum assured and applicable bonuses in case the policyholder dies within the policy term.
The table mentioned below highlights a few of the differences between an endowment and money-back plan:
| Criteria | Endowment | Money-Back |
| Definition | It is an investment and insurance policy. | It is an investment and insurance policy participatory in nature. |
| Benefits | Sum insured and bonuses if any, paid after the completion of the policy | A percentage of sum assured is paid at regular interval |
| Tenure | 10 years to 35 years | 5 years to 25 years |
| Loan Facility | It can be used as security to obtain a loan. | It is not subjected to any kind of mortgage as a portion of the sum assured is constantly deducted. |
Conclusion
The above-mentioned facts must be helpful to you in opting between an endowment plan and a money-back plan. So, you are free to choose one of the life insurance plans depending upon your preferences.
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Written By: Himanshu Kumar
Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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