Selecting
insurance products can be confusing. There are products like unit-linked
insurance plan (Ulip) where the policyholder can choose to invest in different
securities and get market-related returns. Then, there are plans that promise
to return a fixed sum.
However, there
have been two kinds of plans that have been popular with every person seeking
insurance – endowment and money back plans. And there is a confusion that
exists on the difference between the two. Here’s a primer:
Plans that return
money during the policy tenure are money-back policies. These plans, usually,
give a fixed percentage of the sum assured periodically. In a 15-year policy
and sum assured of Rs 10 lakh cover, these plans could give 10 per cent of the
sum assured on completion of three years, 15 per cent after six years and so
on.
Endowment plans,
on the other hand, pays the entire money only when the policy matures. This
includes products that offer the entire premium back and policies that have
part assured returns with bonus on policy Maturity.
Endowment Policy Vs Term Insurance
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