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    Term Life Insurance vs Money-Back Life Insurance - Which One to Choose?

    Last Updated On 22-03-2021

    When it comes to safeguarding your loved ones' financial interests, insurance can be one of the best instruments to invest in. With a variety of products and features, the market is full of offerings in life insurance, health insurance, term insurance, and more. However, a common confusion lies in the minds of most buyers – the difference between term insurance and health insurance.

    Read on to know which one is best suited to your needs as it helps to understand each's unique features.

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    Term life insurance

    This is the purest form of insurance. Here, the insurer pays a pre-determined amount to your family on the occurrence of an unfortunate event during the policy term. So, your family receives the necessary financial support in the form of a death benefit.

    Money-back life insurance

    Money-back life insurance, often wrongly referred to as money back term insurance, is a type of endowment plan that offers the benefit of liquidity. It releases pay-outs at regular intervals as per pre-determined terms in the policy. Most money-back plans also include a component of bonus payment that is paid with the final pay-out.

    Term plan vs money-back plan

    Here is a table of comparison for better comprehension.


    Term plan

    Money-back plan

    Basic feature

    Provides pure protection

    Offers protection as well as investment benefits

    Life coverage

    Comparatively higher coverage

    Coverage is lower than a term plan.


    Usually lower

    May be higher owing to the investment component.

    Maturity benefits None Paid on expiry of the pre-determined tenure
    Death benefits Sum assured Assured sum as well as the accrued bonus
    Returns No investments and hence has no returns. A certain percentage of the sum assured is paid at pre-determined time intervals.

    Tax benefits of term life insurance and money-back life insurance

    Both the insurance variants have an added advantage of tax savings. The premiums paid are allowed as a deduction from the total gross income. However, this is subject to the compliance of Section 80C. The maturity benefits and death benefits are tax-free, subject to Section 10 (10D).

    Besides, complying with Section 80D makes you eligible to claim deductions for associated riders like a critical illness cover, etc. As a result, these insurance plans can also be used towards planning your taxes effectively. However, this should not be the sole motive behind buying insurance coverage.

    Which one to choose - term life insurance or money-back life insurance?

    The friendly fight between term plan and a money-back plan has no single winner. It depends on your financial needs which can vary from individual to individual. It is important to align both insurance plans as per your current financial situation and future goals. From the viewpoint of premium affordability, a term policy may be deemed to be a better bet.

    But the availability of funds at regular intervals makes a money-back life insurance plan appear more suitable. These funds can aid in meeting financial needs at different life phases. By offering survival benefits, a money-back plan provides liquidity. Besides, the bonus under the plan can extend further financial comfort to the beneficiaries.

    Keeping in mind the various features of the two plans, each one's suitability differs from case to case.

    To sum it up

    Term plans, as well as a term plan with money back, are useful insurance plans. To be able to choose one, you must assess your financial needs. In case of any doubts, you should not hesitate from approaching a reliable and trustworthy insurer. PNB MetLife Insurance is one such name in the insurance industry. A PNB MetLife Advisor can guide you to select the most appropriate insurance product to suit your needs.

    Visit PNB MetLife website to know more about savings plansterm insurance & life insurance



    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited
    Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
    IRDAI Registration number 117 | CIN U66010KA2001PLC028883
    For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
    Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time.
    The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
    Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website:, Email: or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.


    Beware of Spurious Phone Calls and Fictitious / Fraudulent Offers!
    IRDAI is not involved in activities like selling insurance policies, announcing bonus or investments of premium. Public receiving such phone calls are requested to lodge a police complaint.


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    Collapsed Expanded

    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at or You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

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