Difference Between Endowment Policy & Money Back Policy

Difference Between Endowment Policy & Money Back Policy

People often find themselves in cross roads when it comes to choose between Endowment Policy and Money Back Policy. However, if the basic differences between these two are clear, then it becomes easy to choose which one is right for them.

Endowment policy is a life insurance which is designed such a way that it pays lump sum of money after the maturity of the term or after the death of the policy holder. The maturity tenure could be ten, fifteen or twenty years. This policy includes such aspects where entire premium is returned along with bonus when policy matures.

Money back policyis one of the very popular policies. It offers life coverage during the term of the policy and maturity benefits are paid by the way of installments.

Similarities between Endowment and Money back policy:

  • Money Back Policy and Endowment Policy both offer death benefits. If the policy holder survives the term of the policy s/he will get maturity benefits and in case of policyholder’s death the benefits will be extended to the nominee.

  • Money back and Endowment do not depend on the volatile market. Thus it ensures guaranteed returns at the end of the term. The money is invested at a fixed rate which accumulates at the end of the term.

The Differences:

  • The endowment policy offers insurance as well as investment options. Which means the policyholder may get more monetary benefit through investments in other units. Whereas Money Back policy offers the assured sums in regular intervals.

    • The endowment policy can be used as a mortgage to obtain a loan. It works as a security. The money back policy cannot be used as such because the assured sum gets deducted in regular basis.