Difference Between Money Back Plans and ULIPs
.png)
What is endowment plan in life insurance? It is the traditional type of life insurance where you get to combine the elements of insurance and investment. The risk factor is low or non-existent. Money back plans are a type of endowment life insurance. Here, the investor is sure of getting fixed returns. A unit linked insurance plan (ULIP), on the other hand, is a type of life insurance where you can invest in the financial markets. The risk is higher but the chance of earning a higher dividend is prevalent too.
What is money back policy?
A money back policy is a type of life insurance where the maturity benefit is broken up into instalments and paid at regular intervals during the policy period. If the policyholder dies before the policy period comes to an end, his or her nominees receive the death benefit too. Thus, a money back policy has a life cover and a scope for investment as well. Money back plans are commonly taken by parents to secure the financial wellness of their kids. The payouts received at various points help to pay for the child’s education milestones. A money back plan is a type of life insurance endowment plan.
What is a ULIP?
A ULIP is also a type of life insurance. However, the format of investment is different in a ULIP. Here, the premium you pay is divided into two parts. The first part is carefully kept in a life fund and it is used as the death benefit if you die within the tenure of the plan. The other part of the premium is invested in the financial markets. You can choose the type of investment you want. If you have a high risk appetite, you can opt for equity funds and if you have a low risk appetite, you can go for the cash funds.
Differences between ULIPs and money back plans
Now that you know the ULIP meaning, money back policy meaning and endowment plan meaning, let us look at the key differences between a ULIP and money back plan:
- Returns: The returns are fixed in a money back plan. However, the returns may vary in a ULIP plan as the fund performance would depend on the condition of the financial market.
- Risk: There is practically no risk involved in a money back plan. This is because the payout happens at a fixed rate that is decided when the policy is bought. The risk is higher in a ULIP because the money is invested in the stock markets.
- Payout: The entire payout of the maturity benefit happens after the policy ends in a ULIP. However, in a money back plan, the payout happens periodically and not just at the end of the policy period.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
Other Life Insurance Products
Latest Post
Arjun has a car that is four years old and most of the parts are performing well. However, the engine started showing some issues and he immediately went to a nearby auto repair shop to get the problem checked. The mechanic clarified that the engine required replacement. As Arjun has a car insurance policy, the insurance company paid the expenses that saved a lot of money.
The thrill of purchasing your first bike is exhilarating. However, before the engine roars and you begin your journey to the open roads that await, do acquaint yourself with the bike insurance-related jargon. Especially while buying the bike insurance plan online, you should be clear about who is a first, a second, or a third party in insurance. This is dissimilar to the first-party or third-party bike insurance policies offered by insurance companies in India.
Anyone willing to ride/operate a two-wheeler on the highways in India must acquire a driving license. There are several types of driving licenses for different types of vehicles in India. MCWG is one such type of driving license that allows individuals to legally and freely ride two-wheelers, including heavy two-wheelers, on Indian roads.
Bringing home a new vehicle is a matter of great joy and excitement for the whole family. But this joy comes with the trouble of undergoing various procedures to get the vehicle registration done by the authorities. You can put yourself in legal trouble by driving your new vehicle without the RC or the Registration Certificate.
Wondering about what is Taxi insurance ? It is a highly specific type of insurance that offers coverage for owners of taxis, who are an indispensable part of our public transportation ecosystem throughout the country. Here’s learning more about the same.
Speak to our Advisor
+91
