Endowment plans are a type of life insurance plans which blend the benefits of a life insurance and an investment tool. Endowment plans can act as an investment tool providing a lump sum amount at the end of the policy term known as maturity benefit. As endowment plans are a type of life insurance plan, these plans provide financial support to the family of the life assured in case of unforeseen demise of the life assured. Usually endowment plans are participating plans which allow wealth appreciation, that is these plans participate in the profits of the insurance provider according to their performance in the market. Hence, additional bonuses (if any) are declared upon the endowment policy at the end of each policy year.
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What is an Endowment Plan?
Endowment plans are a unique type of life insurance plan which combine the benefits of a life insurance and an investment tool. Endowment helps the life assured to invest over a period of time so that he/she can avail a maturity benefit at the end of the policy term. The maturity benefit is provided in case the life assured survives the entire policy.Endowment plans provide life insurance, and the nominee will receive a death benefit if the life assured dies during the policy period. Endowment plans provide financial security to the life assured's family in case of an unanticipated occurrence.
Types of Endowment Plans
Below mentioned are the different types of endowment plans:
- Unit Linked Endowment Plans: Unit-linked endowments plans incorporate life insurance and are a sort of fixed-term savings plan.The premium paid to the plan is invested in various market-linked investment alternatives chosen by the life assured under this plan.This type of endowment plan is ideal for people who have a high-risk appetite. The return of investment under such plans depends on the performance of investment options in the market.
- Full Profit Endowment Plans: Under full profit endowment plans, the life assured receives the basic sum assured. The overall payout, however, varies depending on the bonuses recorded on the endowment policy at the conclusion of each year.The bonus is provided at the time of plan maturity or at the end of policy term.
- Low-Cost Endowment Plans: Low-cost endowment plans help the life assured to accumulate funds which can be paid after a certain time period, usually for the repayment of mortgage.
- Non-profit Endowment Plans: Under non-profit endowment plans a maturity benefit is provided to the life assured in case he/she survives the entire policy tenure. In case the life assured passes away anytime during the policy tenure a death benefit is provided to the nominee.
Features Of An Endowment Plan
Following are some of the key features of an endowment plan-
- Death and Survival Benefits: In the event of the insured's death, the beneficiary/nominee of the policy receives the sum promised as well as bonuses.Furthermore, if the insured lives longer than the insurance policy, he or she is eligible to the basic sum.
- Higher returns: An endowment policy can help you build a future corpus while also ensuring your family's financial stability. The payout for survival and death benefits of an endowment plan is larger than that of a standard life insurance, such as a Term Plan.
- Premium payment frequency:The policyholder can pay a premium based on the insurance he or she has selected. Payments can be made monthly, quarterly, half-yearly, or annually.
- Flexibility in Cover: Riders such as critical disease, total permanent disability, and accidental death can be added to the base plan to increase the life insurance coverage. In addition, a few plans give premium payment waivers in the event of total permanent disability or serious illness.
- Tax Benefits: Under Section 80C and Section 10(10D) of the Income Tax Act of 1961, the policyholder is eligible for a tax exemption on premium payments, maturity, and final payouts.
- Low Risk: Because the money is not invested immediately in equities or the stock market, traditional endowment policies are thought to be safer than other alternative investments such as mutual funds or ULIPs.
Benefits of Endowment Plans
Following are benefits that come along with a endowment e policy -
- Maturity Benefits: Endowment plans pay a maturity benefit to the life guaranteed if he or she lives to the end of the policy term. If there are any bonuses declared on the endowment insurance, in addition to the maturity benefit, a bonus is also granted at the time of maturity.
- Wealth Appreciation: Endowment plans are participating insurance plans that allow wealth appreciation. Every year, bonuses are announced on the endowment policy, which are additional profits delivered to the life insured. On the policy, the insurance company can declare reversionary or terminal bonuses.The bonuses are provided with the maturity benefit at the end of the policy term.
- Additional Coverage: The life assured has the option of adding riders to the endowment policy, which are additional coverages that may be purchased with the endowment policy for a fee. Accidental Death Benefit, Critical Illness Benefit, Waiver of Premium, and other riders are common endowment plan riders.The rider enhances the power of the base cover of your endowment policy.
- Tax Benefits: Under endowment policy the life assured can avail tax exemptions as premium paid for an endowment policy qualify for tax exemption under Section 80C and 10(10D) of the Income Tax Act, 1961. Maturity benefits payable under an endowment plan are also eligible for tax exemptions.
How Does An Endowment Plan Work?
Endowment plans are similar to normal insurance policies in that they provide a steady stream of income. They don't just provide life insurance; they also help you save on a regular basis. When the policy matures, providing the policyholder has survived the policy period, he or she will get a lump sum payment. This money can be utilised for a variety of purposes, including purchasing a home, paying for the education of your child, and putting money down for retirement.
Why Choose InsuranceDekho?
Here are some good reasons why you should choose InsuranceDekho while purchasing an endowment plan: .
- Easy Policy Issuance: At InsuranceDekho you can easily purchase an endowment policy easily by following these simple steps:
- Provide your personal details such as Name, Age, Mobile Number and Date of Birth
- Compare available endowment plans at once
- Select a plan that fits your needs
- Pay the premium and submit the required documents.
- Committed Customer Service: Our customer support team is available all 7 days of the week to provide you with effective solutions for your queries. Our aim is to be always readily available to provide you with best solutions regarding your queries.
- Availability of Best Plans: We have partnered with some of the top-notch insurance providers in India that offer you endowment plans. We strive to provide you with the best insurance plans offered by best insurance providers in India.
- Smooth Claim Settlement: At InsuranceDekho we aim to provide a quick and claim settlement, to ensure that our customers are financially satisfied in difficult times.
How To Buy Endowment Plans With InsuranceDekho?
Purchasing an endowment plan at InsuranceDekho is easy and a quick process. You can compare and purchase an endowment by following these simple steps: .
- Provide Details: To compare different quotes enter your details such as mobile number, name, date of birth and dender. Then click on ‘View Instant Quotes.’
- Compare Endowment Plans: Plans that match your requirement will get displayed and you can compare and choose a plan that best suits your requirements.
- Make Payment: Choose from the available endowment plans and make the premium payment via net banking, e-wallets or debit/credit cards.
- Submit Documents: Submit documents such as ID Proof (Aadhaar Card, Pan Card, Voter ID etc.), Address Proof (Electricity bill, Passport, Ration card etc.), passport size photos, salary slips and a filled proposal form along with medical records for policy issuance.
Investment Insurance Companies
- PNB MetLife Investment Plans
- HDFC Life Investment Plans
- ICICI Prudential Traditional Investments
- Max Life Investment Plans
Disclaimer: InsuranceDekho does not endorse, rate or recommend any particular insurance company or insurance plan.
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FAQ About Endowment Policy
What are the different types of bonuses under endowment plans?
There are 2 different types of bonuses available under the endowment plan which are Reversionary Bonus and Terminal Bonus.
What is the minimum and maximum entry age for purchasing an endowment plan?
The minimum entry age for purchasing an endowment plan is 18 years and for most endowment plans the maximum age is 75 years.
What is Reversionary Bonus?
Reversionary bonus is additional money which is added to death benefit or maturity benefit and is provided at the time of maturity of policy or at the end of the policy term.
What are the key features of an endowment plan?
Below mentioned are some key features of an endowment plan:
- Provides death benefit along with maturity benefit
- Additional bonus is declared upon the policy
- Flexibility to choose premium payment frequency
- Availability of tax benefits
What are the different types of endowment plans?
Different types of endowment plans are Unit-Linked Endowment plan, Full Profit Endowment plan, Low-cost endowment plan and Non-profit endowment plan.
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