If you too are pondering over which insurance policy would best suit your preferences, then this article can ease some of your dilemmas. Let’s take a look at the difference between money-back policy and endowment policy.
Key differences between money-back policy and endowment policy
|Money – back policy||Endowment Policy|
|Definition||A money-back policy is one in which a particular amount of money is paid by the insurance provider to the policyholder at frequent intervals.||
Endowment policy can be defined as an insurance plan in which:
Either the policyholder will receive the total amount in lump-sum after the attainment of the maturity period,
Or in the event of death, the registered nominee of the deceased policyholder will receive the total amount in lump-sum.
|Benefits||A money-back policy offers the following benefits: A fixed percentage of sum assured is paid at frequent intervals. Policyholders enjoy death benefits, bonus, and survival benefits. If the owner of the insurance policy dies, then the death benefit (i.e. sum assured and applicable bonus amount) is paid to the beneficiary.||An endowment policy offers the following benefits: Policyholders can avail loan benefit, maturity benefit, death benefit, and income tax benefit. The cover amount is paid as lump-sum after the attainment of the maturity period. In the event of the death of the policy owner, the death benefit (sum assured and bonus) is immediately paid to the registered nominee.|
|Mortgage facility||A money-back policy cannot be taken into consideration as security for obtaining a loan since a fixed percentage of sum assured is deducted at regular intervals.||
On the other hand, an endowment policy can be used as security for procuring any kind of loan.
|Duration||The tenure of a money-back policy can range somewhere between 5 and 25 years.||Whereas the tenure of an endowment policy can range between 10 and 25 years.|
If it is the first time you are buying an insurance policy, then you should always be aware of your expectations as well as the features, benefits, tenure, output, and other such requisites of an endowment policy and money-back policy. These factors can help you can make a well-informed decision.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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