All About Endowment Plans And Money Back Plans
Table of Contents
It is quite popular to hear individuals say they have purchased an endowment insurance plan or have a money-back plan. Both are packaged life insurance plans that provide twin advantages of life insurance and savings, and meet the tax deductions requirements. But there are few differences between the two, which is how the maturity advantages are structured. You should know these differences to buy the best insurance plan.
What Is A Money Back Policy?
This is a life insurance policy meant to pay a fraction of the sum assured at regular intervals rather than the lump-sum amount in case of death or maturity. It is an endowment policy with the benefit of liquidity.
This plan is ideal for short-term investment like your child’s admission to the college for a particular course. The money paid at intervals brings inspiration to the policyholder for scheduling small family actions. It helps the person to progress in life with regular income assistance. Thus, those persons having such plans can choose for a money back plan.
Also Read:- All About LIC’s Money Back Plans
What Is An Endowment Policy?
An endowment plan is a policy meant to pay a lump-sum after a fixed period in case of death or maturity. This plan is for those investors who want to have long-term plans. People planning for future events such as a retirement plan or their children’s marriage can opt for this plan. It has higher costs, but it also pays you an attractive assured amount after the policy term. This secures the savings and provides insurance to the policyholder.
Resemblances of Money-Back Plan And Endowment Plan
A money-back plan and endowment plan are the types of life insurance plans. Both plans offer maturity and death benefits. The policyholder can use this plan as an insurance plan and an investment plan.
Also, the sum assured is paid in case of death and survival in the endowment plan. As the extra features are provided, the amounts are more than normal plans. These plans are not reliant on the market like ULIPs. The risk in both the plans is a bit low as the policyholder invests on a fixed rate that is agreed in advance when buying the policy.
Differences Between Money-Back Plan & Endowment Plan
The difference between the money back plan and endowment plan is that one receives the sum assured and the additional benefit at the endowment plan’s maturity period. While in a money-back policy the person gets a fraction of the sum assured at normal intervals. The death benefit is the sum assured and bonuses applicable if the insurance holder dies in the policy period.
You May Also Like To Read:- 5 Things You Should Know Before Buying an Endowment Plan
Top Benefits Of Buying An Endowment Policy
Conclusion
An endowment plan can offer maturity benefit, death benefit, and participation in the insurance company’s profits according to the terms and conditions mentioned in the policy. Also, you can get optional death and disability benefits by buying an endowment policy. You can select a money back plan if you need a regular flow of money. But, the returns will be less than in an endowment policy. You can select riders to enjoy special advantages and to cover the risk to the best potential extent.
