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5 Tips To Buy An Endowment Policy

Published On Jan 15, 2022 10:20 AM By InsuranceDekho

Do you automatically associate insurance products with policies that have no financial value and no liquidity for the policyholder? We understand that most life insurance policies are only valuable to the beneficiaries after the policyholder has passed away. However, for your personal financial goals, you could be interested in a classic endowment plan.

Because it's quite traditional and has been around for longer than other investment approaches, an endowment plan doesn't get much recognition. However, you might be shocked to learn that in this category, you can obtain the benefits of insurance as well as the benefits of a savings plan.

A savings plan is one that permits you to pay regular premiums and earn fixed compounded returns in such a way that your purchase price, or premium, is eventually given back to you or your nominees.

5 Tips To Buy An Endowment Policy

5 Tips To Buy An Endowment Policy

The following are a few tips to buy an Endowment policy: 

1. Pay Attention To The Options For Payment

The goal of the endowment is to make your dependents' lives easier in your absence, not to make your life easier. For your family members, the method the plan pays out the benefit is critical, especially if they are financially dependent on you.

Imagine your husband and children relying on your financial decisions and involvement, and they suddenly inherit Rs. 2 crores from your life insurance policy. Despite the size of the cash, it is the only money they will receive for many years. They must also choose one of the following three:

  • Ensure that your debts are paid off.
  • Invest for the future.
  • In charge of the kitchen

While the first two are still simple to accomplish because they only require a one-time payment, the third option poses a greater barrier. If you withdraw too little, you risk reducing your standard of living; if you remove too much, you risk running out of money in the future.

2. Using Riders To Increase Coverage

Riders are extra coverage options for your life insurance policy. These insurance policies will supplement your risk coverage by giving cash support in a variety of situations. For example, if you are involved in an accident, the unintentional rider will assist you financially. If you lose any two limbs, the rider will ensure that your term insurance continues without having to pay any more premiums.

The best term policy is one that has helpful riders, such as:

  • Coverage for accidental death and disability
  • Benefits for those with terminal illnesses
  • The benefit of a premium waiver

3. High-Claim-Settlement-Ratio Insurance Providers

One of the most significant factors to consider when buying life insurance is the claim settlement ratio. The following two facts are revealed by this ratio:

When a new claim is filed, how quickly does the insurance company settle it?

Both of these elements are crucial in determining how easy your family members will receive the financial assistance you have set up for them.

4. Things To Remember While Purchasing 

Since this company is offering a much larger spectrum of endowment schemes, choosing the correct one for everyone is based on a range of factors, including your personal requirements, income, tolerance for risk, and so on. If you're considering putting a significant amount of money into an endowment plan, make sure you check the rates first. You might well be selective in choosing an endowment plan for you by comparing the rates of several programs.

5. Reason To Choose Endowments

An endowment plan benefits the individual in a consistent way that simply meets your future requirements. Consisting of basic features, the subscriber receives comprehensive coverage as well as the chance to develop a reservoir for a secure future underneath this plan.


There is a level of consistency in these policies because they frequently pay out a large sum of money. The payments may be enough to pay off loans, supplement your income, and more, depending on the policy you choose and the premium level. As a result, they've earned the moniker "income secured plan."

Your endowment policy can potentially last longer than the term you choose. You may easily have your term lengthened or simply obtain a new job.

Also read- Know Why Endowment Policy Is A Good Choice Of Investment

Is It Safe To Purchase An Endowment Policy Online?

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.

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