It’s quite common to hear people say they have bought an endowment insurance plan or they own a money-back policy. Both are bundled life insurance policies that offer twin benefits of savings and life insurance, and both qualify for tax deductions. But there is one big difference between the two, and that is in the way the maturity benefits are structured. Read on to know the difference.
Endowment plan
You have an endowment policy when the maturity benefit is made available to you after a specified term; this is usually the policy term. So if you buy a life insurance endowment policy for 15 years, you are entitled to the investment benefit at the end of 15 years. This is the basic premise of an endowment plan. Even a unit-linked insurance plan (Ulip) qualifies as an endowment policy because the premiums that you pay every year get invested every year in your choice of funds, after all costs have been deducted, and at the policy term, the fund value is made available to you as the maturity benefit.
