Endowment Plan vs Money Back Plan: With the changing times, people have become more cautious about saving and planning for the future. There has been a lot of demand for endowment plans and money back policies in the market. Many times customers do not understand the difference between the two properly and they consider the plan to be the same. But, let us tell you that there are some differences between money back plan and endowment plan. If you are also planning to buy money back plan and endowment plan in the next few days, then understand the difference between the two. Know the details of both.
What is Endowment Plan?
Endowment plan is a part of life insurance policy itself. Along with giving insurance cover to the policy holder, it also gives the option of saving to the people. If you invest in an endowment plan, you get a fixed lumpsum amount on maturity of the policy. You can use this money as savings. On the other hand, if the policyholder dies before the policy maturity, then in such a situation, the sum assured of the policy is given to the nominee in the form of financial assistance. On the other hand, in the money back plan, the policy holder gets some money as return from time to time. In endowment plan, along with saving option to the policyholder, it also gives a fixed lumpsum amount on the survival of the insured.
Similarities of Endowment and Money Back Plan
- If the policyholder dies before the maturity of the policy, in both cases the nominee gets the money.
- By investing money in both the policies, you do not face market risk.
- In both, you have to pay premium on the basis of annual, 6 months, 3 months or monthly basis.
- Both the policies offer almost the same benefit in tax exemption.
Difference between endowment and money back plan
The major difference between both the policies is that in the money back plan, the investor gets money every few days at intervals. For this reason it is called money back plan. Whereas in endowment plan, the investor gets all the money in one go only after maturity.