Right now people have become more cautious about saving and planning for the future. There’s been a surge in interest for endowment plans and money back policies lately. A lot of folks often mix them up, thinking they’re the same thing. But there are some key differences between a money back plan and an endowment plan. If you’re considering getting one of these plans soon, it’s important to know how they differ. Let’s break it down.
What’s an Endowment Plan?
An endowment plan is essentially a life insurance policy that combines coverage with a savings component. When you invest in an endowment plan, you receive a lump sum when the policy matures, which can serve as your savings. If the policyholder passes away before maturity, the nominee gets the assured sum as financial support. On the flip side, a money back plan provides the policyholder with returns at regular intervals. So, while the endowment plan offers a lump sum if the insured is alive at maturity, the money back plan gives you cash along the way.
Similarities Between Endowment and Money Back Plans
1. If the policyholder dies before the policy matures, the nominee receives the payout in both cases.
2. There’s no market risk involved with either policy.
3. Premium payments can be made annually, semi-annually, quarterly, or monthly for both.
4. Both plans provide similar tax exemption benefits.
Differences Between Endowment and Money Back Plans
The main distinction is that with a money back plan, the investor receives money at regular intervals, which is why it’s called a money back plan. In contrast, an endowment plan pays out the entire amount only after the policy matures.
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