Parameter

Endowment Plan

Money-back Policy

Payout structure

Provides a lump sum maturity benefit at the end of the policy term.

Offers periodic payouts throughout the policy term, plus a reduced lump sum at maturity.

Investment focus

Focuses on long-term savings and accumulation.

Provides liquidity at regular intervals for short-term needs.

Bonus additions

Accumulates bonuses over the policy term, increasing the final maturity payout.

Bonuses may be added to both periodic payouts and the final maturity amount.

Overall returns

Suitable for individuals seeking predictable long-term savings.

Returns are lower compared to endowment plans due to interim payouts.

Parameter

Endowment Plan

Money-back Policy

Duration

Designed for long-term financial goals, usually 15-30 years.

Better suited for short to medium-term needs, typically 10-20 years.

Maturity benefits

Lump sum maturity benefit provides financial security for long-term goals like retirement or child’s education.

Periodic payouts support short-term financial requirements while still offering maturity benefits.

Liquidity

Limited liquidity during the policy term.

Higher liquidity through regular payouts to meet immediate needs.

Financial goal alignment

Ideal for creating a long-term corpus for wealth accumulation.

Ideal for meeting periodic financial milestones, such as education fees or loan repayments.

Parameter

Endowment Plan

Money-back Policy

Premium payment term

Fixed premium payment throughout the policy tenure or for a limited period.

Premiums are paid regularly until the policy term ends.

Affordability

Premiums are typically higher due to the larger maturity benefit.

Premiums are relatively lower but offer lower maturity benefits.

Payment frequency

Flexible payment options, including monthly, quarterly, half-yearly, or annually.

Similar premium payment flexibility.

Budget considerations

Suitable for individuals who can commit to regular premiums for long-term savings.

Suitable for individuals seeking periodic returns with manageable premiums.

Parameter

Endowment Plan

Money-back Policy

Risk level

Low risk with guaranteed returns at maturity.

Low risk with periodic payouts reducing overall maturity value.

Coverage duration

Provides life insurance coverage for the entire policy term.

Offers life coverage until the policy term ends but with interim payouts.

Death cover

Nominee receives the sum assured and accrued bonuses in case of the policyholder’s death.

Nominee receives the sum assured minus any interim payouts already disbursed.

Risk-return balance

Ideal for those seeking financial protection combined with savings for future goals.

Suitable for those prioritising liquidity along with financial protection.

Parameter

Endowment Plan

Money-back Policy

Premium deductions

Premiums qualify for deductions under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh annually.

Premiums qualify for deductions under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh annually.

Maturity benefits

Maturity payouts, including bonuses, are tax-free under Section 10(10D).

Periodic payouts and the final maturity amount are tax-free under Section 10(10D).

Death cover

Death cover is fully exempt from tax.

Death cover is fully exempt from tax.

Tax efficiency

Ideal for individuals seeking long-term tax-efficient savings.

Suitable for individuals who want tax savings while meeting short-term financial needs.