10 Most Frequently Asked Question About Endowment Plans

Endowment Plans are currently the most sought after plans individuals choose to secure their future in a safer and reliable way. It is a life insurance cum savings policy available in both long term and short term maturity and premium plans and helps you invest your hard-earned money in a judicious way. The best part of investing in an Endowment Plan is the flexibility it offers in terms of premium payment terms and policy periods.

Most of the people looking for long term and safe investments hesitate to invest in policies such as Endowment Plans due to lack of knowledge on how these plans work and what more they have to offer as compared to other policies and thus miss out on such a great investment option.

10 Most Frequently Asked Question About Endowment Plans

Are you also looking more about an Endowment Plan and are confused about how it works? We’ve curated this list of 10 most frequently asked question asked about Endowment Plans so you could analyze your policies carefully -

1. What Is The Basic Difference Between Term And Endowment Life Insurance?

Term plans are simple life insurance policies with no extra benefits. While Endowment plans, combine insurance and investment. As a result, if you live to the conclusion of the policy term, the endowment policy pays you the corpus too. 

2. Do Endowment Plans Come With Higher Premium Rates?

This is true since Endowment plans to give you both the sum assured and the interest in case you survive the policy term. In order to get a greater dividend or benefit at maturity, you may have to pay higher premium rates hence it is advisable to analyze your future needs beforehand.

3. When Should I Buy An Endowment Plan?

Investing for your future is always a good decision, you should invest in endowment plans early in your career when you have a steady income flow, fewer liabilities and the capacity to save more and more so you could both earn from it and also save for your future needs.  

4. What Are The Benefit Payout Choices?

In Endowment Plans, the policy benefits are available in lump sum only upon the maturity of the plan or the demise of the policyholder, in this case, the nominee receives the benefits. 

5. Are There Any Tax Exemptions For Investing in Endowment Plans?

Yes, you and/or your nominee, whosoever is receiving the benefits can avail tax exemptions on the plan proceeds under Section 10(10D) of the Income Tax Act. You can also claim a tax deduction of up to Rs. 1.5 Lakh under Section 80C of the Act towards the premiums paid under the plan.

6. What Are the Things I Must Ensure While Buying An Endowment Plan?

Firstly, it must preserve and ensure the financial stability of your family; secondly, it must be able to meet your future financial goals and thirdly, it should give you a good return on your investment. 

7. How Do I Check The Background Of My Insurance Company?

Do market research to find out the claim settlement ratio, financial stability, customer satisfaction and other indexes of the company. 

8. How Do I Benefit More Out of My Plan?

Endowment plans have the flexibility of maturity period and premium rates. Since there is less risk, the more premium you pay, the more corpus you can make upon maturity but sometimes it goes beyond your risk profile therefore you should invest wisely. 

9. Do Endowment Plans Offer Riders?

Yes, Endowment plans are very flexible and offer you a wide range of riders but of course at an extra cost. If you want additional coverage, you should definitely pay for riders.

10. What Happens When I Stop Paying The Premiums?

If you stop paying your regular premiums, your policy will get lapsed and you will not be entitled to receiving any benefits of your plan however you’re paid according to the policy. It is advisable that if you’re unable to pay your premiums, you should either make the policy reach the paid upstage or surrender it so that you can at least get some profit out of your investments. 

Take Away

This post will clear all your doubts regarding buying an Endowment Plan. Measure all your needs regarding the plans suitable for, analyse your financial goals, start saving and earning more from the very beginning of your career!

Also Read: 

Difference Between ULIPs And Endowment Plans

Why Buying Endowment Plans Online Is A Good Option?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.