5 Things To Keep In Mind While Buying An Endowment Policy
Published On Mar 18, 2022 10:00 AM By InsuranceDekho
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An endowment policy is a type of policy that combines the benefits of insurance with investing. Such a policy provides insurance coverage, with the nominee entitled to the sum promised in the event of the policyholder's death. This gives a high level of financial security since it assists your loved ones in meeting their financial commitments even when you are not around. Endowment plans, in addition to insurance coverage, provide a lump sum reward upon policy maturity.
If you want to enjoy the twin benefits of wealth building and insurance coverage, investing in an endowment saving plan is the perfect alternative. While shopping for such an insurance, keep the five suggestions below in mind.
5 Things to Consider When Purchasing an Endowment Policy
The following are some of the benefits of endowment plans. Continue reading to determine whether or not an Endowment Plan is a wise investment for you.
1. Long-Term Investment
While Endowment Plans may not deliver the highest returns when compared to other pure investment products such as Mutual Funds and the like, they do contribute to the development of a Long-Term Corpus. In reality, it benefits many individuals by forcing them to save.
2. Coverage And Investment
As previously stated, an Endowment Plan offers life insurance as well as the flexibility to invest in a variety of assets. As a result, you will get a considerable sum of money upon your death or the maturity of the policy, whichever comes first.
3. Profit from Taxes
Endowment plans, like most other forms of insurance, provide a tax break on both sides. Because the Sum Assured in a Traditional Endowment Plan is always greater than ten times the premium paid, the premium invested in this plan is tax-free up to Rs 1 lac per year under section 80C, and the Maturity Benefit is tax-free under section 10(10)D. As a result, the new IRDA standards are meaningless in this case.
An endowment policy can be used to finance a loan. Endowment Plan loans are generally accessible since they are long-term plans that promise a higher sum of money.
5. As a Savings
Endowment plans are ideal for those who wish to save money for a specific reason and then use it later. Endowment Plans are popular retirement benefits because the money is guaranteed to be paid out when the person retires. Some investors save away money for a major life event, such as their child's wedding or college tuition. As a result, an endowment plan is perfect if you are employed.
An endowment plan is a form of insurance that combines the advantages of both insurance and saving. You can save consistently with this sort of insurance plan and receive a lump-sum payment when the policy expires. You will receive an assured payment at the conclusion of the insurance period based on the terms and conditions indicated. In the event of your death, the insurance company will pay the guaranteed sum plus any earned bonus to the nominee selected in the policy (if any).
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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.