If you are in your 20s, you must have heard about life insurance, term insurance, and other forms of insurance. Term insurance is your run-of-the-mill insurance policy that provides only life insurance protection during the term. But life insurance plans do more than giving life insurance coverage. They also offer the opportunity to save and grow your wealth.

Features of a money back insurance policy:

Under a money back insurance policy, you get:

• Guaranteed¹ income payouts at regular intervals of time starting from the 4^th year onwards. These payouts are a percentage of the base sum assured and can be anywhere between 20% and 70%.
  
• Life insurance coverage that gives a guaranteed¹ death benefit (sum assured) to your loved ones in the event of your unfortunate demise
  
• A guaranteed¹ maturity benefit that pays the remaining percentage of the sum assured along with any  bonuses²,if any.
  
• A share of company-made profits through a terminal and reversionary  bonuses²
  
• The option to get a loan against the money back insurance policy in case of an emergency

 

Features of an endowment life insurance policy:

An endowment life insurance policy is also non-linked but can be participating or non-participating. It means that the life insured is not guaranteed¹ to receive company-made bonuses² unless the endowment plan is participating.

 

Unlike the regular income payouts given to the life insured during the term under money back plans, endowment plans give regular income payouts after completing the entire term. It ensures a long-term plan where the life insured receives income only during the income period, which commences after an average of 10 years from the date of purchasing the endowment plan.

 

However, the income received can be monthly or annual payouts, unlike money back plans where the income is received every few years.

 

With an endowment assurance policy, you also get:

 

• Guaranteed¹ income payouts every month or year starting after the maturity/ completion of the plan.
• Life insurance coverage that pays a guaranteed¹ death benefit
• The option to opt for joint life (spousal) coverage.
  
  
  

Which one should I choose: Money back or endowment plan?

Depending on which stage of your life you would like to receive financial support, you can choose either of the two life insurance plans.

 

If you have short-term and immediate goals to fulfil and would like to receive income as soon as possible, a money-back plan would be right for you. These could include paying for day-to-day household expenses, repaying a loan, rent payment, and the like.

 

But if you have long-term goals that need continuous and higher financing and wouldn’t mind waiting for ten years or more, an endowment plan will serve your needs better. These goals could include funding a child’s higher education or marriage, spending your retirement years in leisure, or buying your dream home.

 

The bottom line:

Both money back and endowment life insurance plans give you the flexibility to choose when you want to receive the fruits of your saving. They are safe avenues that promise guaranteed¹ returns and benefits at fixed intervals. In the end, the appropriate life insurance plan is one that provides financial support at your preferred time of need – whether it is immediate or at a later point in time. So before you make a decision, it would be wise to assess your goals.

 

L&C/Advt/2022/Aug/1904