Money Back Policy Vs Endowment Plan Know The Difference And Similarity

With the changing times, people’s concern about saving and investment has increased. Talking about investment, there are many products available in the market for this. Especially insurance is counted among its best solutions, although whenever it comes to it, the most talked about is Endowment Plan and Money Back policy.

difference between the two plans

Although both types of policies have their own advantages and there are some similarities between the two, but there is some difference between the two. If you understand the difference between these two types of plans very well, then you can get the most out of them by using them in the best way. Let’s understand what are the differences between the two and where is there more benefit in investing…

Endowment Vs Money Back Plan

• Both endowment plan and money back plan offer investment option along with life cover.
• In an endowment plan, on maturity of the policy, the amount of Sum Assured (Total Premium + Bonus) is received. That is, at the time of maturity, big money comes in hand.
• On the other hand, in money back policy, some money is received in the form of return at certain times like 4 years of the policy, then 8 years, then 12 years. This maintains the availability of cash. The remaining amount is given on maturity of the policy.
• The premium for an endowment policy is lower than that of a money back. On the other hand, in endowment policy, you get more bonus and returns than money back policy.
• Death benefit is available in both the policies. That is, in case of death of the insured person during the term of insurance, the sum assured amount is received by the nominee. This amount is completely tax-free.
• Tax exemption can be availed under section 80C of the Income Tax Act for investing in both endowment and money back.

Understand the difference in less words

Now you must have understood everything. If you have to pay less premium and get more returns, then endowment plans are better for this. This is also better for those who want a lump sum amount. On the other hand, if you need money in between, then choose the money back plan. However, for this you will have to pay a higher premium and at the same time you will have to make some compromises in terms of returns as well.