5 Things To Keep In Mind While Purchasing An Endowment Policy
Updated On Feb 06, 2022
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Before selecting the plan that best suits your objectives, you must evaluate your goals, requirements, investment target, and other considerations. An endowment plan is essential because it assures your family's financial security after you retire. It allows you to put money towards your child's education, marriage, and the purchase of your dream home. In today's world, a basic investment strategy is no longer sufficient. People increasingly want the advantages of both an investment and a savings plan in a single policy. In this case, endowment plans may come in beneficial. We'll take a closer look at endowment plans in this post.
5 Things To Think About When Buying An Endowment Policy
Some of the advantages of endowment plans are listed below. Continue reading to see if an Endowment Plan is a good investment for you.
While Endowment Plans may not provide the best returns when compared to other pure investing products such as Mutual Funds and the like, they do help to build a Long-Term Corpus. In actuality, it benefits in forced savings for many people.
Investment And Coverage
An Endowment Plan, as previously indicated, provides life insurance as well as the ability to invest in a number of securities. As a result, upon your death or the maturity of the insurance, whichever comes first, you will get a substantial quantity of money.
Benefit from Taxes
Endowment plans, like most other types of insurance, offer a double tax benefit. 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, because the Sum Assured in a Traditional Endowment Plan is always more than 10 times the premium paid. As a result, the new IRDA guidelines are irrelevant in this situation.
A loan can be secured by an endowment policy. Endowment Plan loans are widely available because they are long-term plans with a larger quantity of money guaranteed.
As a Fund
An endowment plan is perfect for people who want to set money aside for a specific purpose and then spend it later. Many people choose Endowment Plans as retirement benefits since the money is guaranteed to be paid out when they retire. Some investors put money aside for a significant life event, such as their child's wedding or college tuition. As a result, if you are employed, an endowment plan is ideal.
A type of insurance known as an endowment plan combines the benefits of both insurance and saving. With this type of insurance plan, you can save regularly and receive a lump-sum payment when the policy expires. At the end of the insurance term, you will receive an assured sum based on the terms and circumstances stated. The insurance company will pay the guaranteed amount, plus any earned bonus, to the nominee named in the policy in the case of your death (if any).
You may also like to read - Who Should Purchase Endowment Policy?
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.