Should You Invest In Money Back Plans or Endowment Policies?
0 Comments 
Choosing a life insurance plan is always a difficult task as there are a plethora of insurance products available. Apart from various other life insurance products, two traditional life insurance plans in which many of us get confused is money back plan and endowment plan. People could not find out whether they should go for the best endowment policy or opt for a money back plan. Well to overcome this confusion we are here discussing the basic difference between these two plans:
Money Back Plan and Endowment Plan – An Overview
Both money back and endowment plans are there in the market for quite a long time, but people are not sure which to select as most of them could not find out the basic difference between the two.
Even though both the plans are life insurance cum savings plans, but there is a slight difference between both of these. This slight difference lies in their survival benefits. The survival benefit that endowment plan pays upon maturity of the policy includes the sum assured as well as a bonus. On the other hand, the money back policy pays out the survival benefit usually as a fixed percentage of the sum assured at regular time intervals during the tenure of the policy. However, in case of money back policy the remaining sum assured with bonuses are paid to the insured upon maturity of the policy. In case of demise of the policyholder, both money back and endowment plans pay the sum assured to the nominee of the policy.
In this way, both these plans are savings plans, but the money back plans are there to fulfill the short term goals of the policyholder as they payout at regular intervals.While endowment plans provide a huge sum assured upon maturity of the policy.
Let us look at the fundamental difference between these two through the following table:
| Factor to Consider | Money Back Plans | Endowment Plans |
| Benefits | The insured gets a % of sum assured at a specific time interval and the remaining sum assured is given with bonuses at the maturity of the policy if the insured survives the plan term. | The specified sum assured as well as all the applicable bonuses are given at the time of policy’s maturity if the policyholder survives the policy term. |
| Death Benefit | Both the plans pay the sum assured as well as applicable bonuses on the death of the policyholder if he/she dies during the policy term. | |
Basically, money back plan pays out regular income after a regular interval and most of the times it is 5 years. Generally, for a policy of 20 years, the survival benefit that a policyholder gets becomes 120% of the total sum assured.
| Policy Year’s End | Survival Benefit As % of Basic Sum Assured of the Plan |
| 5 years | 20% |
| 10 years | 20% |
| 15 years | 20% |
| 20 years | 60% + Vested Bonus |
| Total Benefit = 120% | |
Which policy is better?
If the aim a person behind purchasing a policy is to fulfill his/her short term goals and get some money after a regular interval, the money back plans are best for them. There are much money back plans available online and one can purchase the best money back policy according to his/her requirements.
However, if one’s aim of the investment is to accumulate large corpus and get it at the time of maturity of the policy, then selecting an endowment plan is recommended. In this way, it is entirely choice of a policyholder to decide which plan is best suited for him/her. There are many endowment plans also available and to select the best one must know his/her requirements first.
One should always remember that it is the personal expectation and requirements of an individual that should be kept in mind before selecting a plan as investment and life cover.
Summing It Up!
Before selecting any of the plans out of these two policies, it is suggested to check an individual’s objective of investment and his/her expectations from it. One way to do this is to compare different policies on the bases of its inclusions, benefits, and rider benefits provided in it. See an individual’s expectation with that plan. If both match then finalizing that plan can be taken into consideration. One can compare different policies of money back plans and endowment plan online with the help of a good insurance web aggregator. Last but not least, both these plans are good investment plans and it is just the requirement of an individual from the policy. So, do not hesitate, just understand the inclusions of your plan and enjoy the benefits.
