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Difference Between Money Back and Endowment Policy

Though endowment and money-back plans are life insurance policies that offer twin benefits of savings and investments, here are the different between the two savings plans.

  • Jul 06, 2022

You must have heard people discussing purchasing an endowment policy or the money-back plan. These are life insurance policies that offer policyholders twin benefits of savings and investments. These policies even qualify for tax deductions. So, do you also get confused between an endowment plan vs a money-back plan? Does it become difficult to decide which one is better for you? Worry not! This article has in-depth detail regarding the money-back vs endowment plan.

What is an Endowment Plan?

An endowment plan is a life insurance plan that is designed in such a way that the policyholder gets the lump-sum amount after the maturity of the policy, or the nominee gets the amount after the policyholder’s demise. It is a preferable plan for those investors who want a long-term strategy. No doubt, the premium charged on this plan is a little high, but you get a handsome amount after the term. The sum invested in an endowment plan will cover all the financial risks that an investor will face in their life and will present you a lump sum amount at the end of the policy term.

What is a Money Back Plan?

A money-back plan is a life insurance plan designed to pay a percentage of the sum assured at regular intervals instead of the lump-sum amount. In addition, the remaining amount will also be delivered along with interest to the insured person when the policy term expires. This plan ensures liquidity and is helpful for short-term investment. For those who want to protect their life along with the investment, a money-back plan is a fantastic one.

Endowment Plan vs Money Back Plan

Although both the endowment plan and money-back plan are life insurance plans that offer similar benefits of saving and investment, both of these plans have some differences as well. Keep scrolling through to know the details:

Term and Maturity Benefits

For the endowment plan, the guaranteed amount and the rewards are made at the end of the maturity period if the policyholder outlives the policy term. There are no provisions for making payments in between the term period. Whereas, in the case of a money-back plan, the insured person will receive the portion of the sum assured at a pre-decided period during the policy period.

Mortality Benefits

Both the plans will give a mortality benefit i.e., the amount guaranteed and appropriate bonuses if the insured person departs during the policy’s tenure. But, in case of the money-back plan, the dependent of the insured person paid the entire sum assured irrespective of the premium instalments paid after the sudden demise of the policyholder. This very attractive feature differentiates the endowment plan vs money back plan.


An endowment plan benefits all those who wish to save funds for meeting their long-term economic goals like building a house, buying a vehicle etc. At the same time, a money-back plan is suitable for those who prefer short-term investments to meet sudden expenses like paying EMIs, household expenses, children’s school fees, and many more.


The risk involved in the case of endowment plans is relatively low as compared to that of a money-back policy. However, the survival and mortality benefits in an endowment plan are higher as compared to money back plan.

Endowment Plan vs Money Back Plan: The Final Conclusion

Now you must have an in-depth idea about what endowment and money back plan is and the differences between the two; you can easily decide which plan is most preferred to meet all your needs. While an endowment policy will pay the investment benefit at the end of the policy term, a money-back policy staggers the investment benefit throughout the policy term at regular intervals.

Therefore, modern-day investors consider an endowment policy slightly better than a money-back policy. However, since the money-back plan offers investment benefits early on, the rate of return on these plans is somewhat lower than endowment policies. Therefore, before buying any plan, it is advisable to check the benefits offered by both methods.

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- A Consumer Education Initiative series by Kotak Life

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