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Difference Between Endowment and Money-back Plan

By Vikas Chandra Das
21 July 2022, 11:46 AM
must know difference between endowment and money back plan

With a large number of insurance products available in the market, choosing the right insurance policy is a difficult task. Moreover, there is often misselling of life insurance products by the intermediaries which can add up to your confusion.

When it comes to the purchase of the right insurance policy, people would usually resort to making investments with the traditional insurance plans such as the Endowment plans and Money-back plans. These remain the first choice of people; however, people usually get confused with the areas like returns and policy benefits of these plans. 

So, let us attempt to find out the major differences between the Endowment plans and Money-back plans in this article.

What is an Endowment Plan?

An Endowment Plan is a life insurance policy which helps in the payment of a lump sum amount after the completion of a specific time interval on the maturity of the policy or in case of your death.

  • You should opt for an Endowment Plan if you have long-term goals
  • The Endowment Plan would have a higher premium but at the same time, it would return you a good assured amount when your policy term is completed
  • It is helpful as it would secure your savings and would provide you with insurance at the same time
  • If you have long term goals such as the marriage of your children or retirement plans, then Endowment Plan is the best option for you

What is a Money-back Plan?

By a Money Back Plan, you would obtain a percentage of the sum assured at specific intervals instead of obtaining the lump sum amount in case of maturity of the policy or in case of your demise. 

  • You can avail of the benefit of liquidity with the help of a Money Back plan
  • Money-Back plans would be helpful in case of short term investment such as the admission of your child into college
  • If you want the protection of your life and investment too in such a way that you would obtain an amount at regular intervals
  • This money which you would obtain at regular intervals would give you the motivation for planning small activities. This would help you to progress in life with normal income

Key Differences Between Endowment Policy and Money Back Plan

The major differences between the Endowment policy and the Money back plan can be listed below.

 Endowment PlansMoney-back Plans
DefinitionAn endowment plan can be considered as an investment and insurance policyA money-back plan is an investment and insurance policy along with liquidity at regular predetermined intervals
  1. You can avail of the death benefit, loan facility, maturity benefit, and income tax benefit
  2. Some endowment plans have a component of the bonus
  3. After the maturity period has been attained, the cover amount can be paid to you as a lump sum.
  4. In case of your demise, the death benefits i.e. sum assured and bonuses are paid to your nominee and the policy terminates
  1. You can avail of the death benefit, survival benefit, maturity benefit and tax benefit.
  2. Some money-back plans have a component of the bonus
  3. A fixed percentage of the sum insured would be paid to you at specific intervals as survival benefit
  4. The remaining amount would be paid to you on policy maturity
  5. However, if the insured dies within the policy tenure, the death benefit is paid to the nominee, irrespective of the amount paid as survival benefit earlier
TenureThe tenure for an Endowment policy can be between 10 years and 25 years.The tenure for a Money back plan can be within the range of 5 years and 25 years.
Benefit receipt termIf you would survive the policy term, then the sum insured and the bonus can be obtained by you at the policy’s maturity.You would obtain a percentage of the sum insured at specific intervals and the balance sum insured along with the bonus are paid on policy maturity.

However, despite these differences, there are some similarities between these two plans too.

  1. Both the Endowment plan and Money-back plans provide maturity benefits and death benefits.
  2. Both plans are used as an Investment plan and Insurance plan
  3. The additional features which are present in both the Insurance plans make the premium high for both of them
  4. Endowment plans and Money-back plans are not dependent on the market like the Unit Linked Insurance Plans
  5. The risk which is involved in both the plans is low as the amount invested is on a fixed rate which has been decided at the time of policy purchase.


So, Money back plans would help you in obtaining returns at specific intervals thus, helping you to accomplish your short term goals. At the same time, the Endowment Plan would help you in saving a large amount which can be of great help to you. Hence, before selecting either an Endowment plan or a Money back plan you must check your objective of investment, compare policies online, and then finalize one.

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