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All You Need To Know About An Endowment Policy

Published On Apr 01, 2021 12:00 AM By InsuranceDekho

The world today is fast-paced and filled with uncertainties. Under these circumstances, it is important to get an insurance plan. It safeguards the financial interests of you and your family. If you are looking for economic sustainability in your personal life, you should get an insurance plan as soon as possible.

Endowment policies are a popular form of insurance. They provide protective cover and lump-sum benefits at the time of maturity or death. Not only do they help the policyholder get insured but also provides them with an opportunity to judiciously invest their assets. This article will discuss all you need to know about an endowment policy.

Also Read:- How Do Endowment Plans Generate Returns?

What is an Endowment Policy?

An endowment policy is an insurance policy wherein a regular premium is collected from the policyholder and the returns are in the form of benefits after a certain period of time. Endowment plans give out death and maturity benefits. The maturity period can be set for ten, fifteen, twenty or even twenty-five years. The benefits have to be taken out in lump-sum. There is no option for instalment payouts.

Features of Endowment Policies

Endowment policies have several features that set them apart from other types of insurance plans. Take a look at them below:

1. Higher Returns

You can get returns from an endowment policy at the time of death or maturity of the plan. These returns are usually higher than the ones received from most life insurance plans.

2. Lower Risks

The risks associated with endowment plans are low to almost negligible in most cases. In unit-linked endowment plans, you may choose a higher risk investment fund but that depends on the policyholder’s choice.

3. Riders

Endowment plans offer the choice of addition of riders onto a basic endowment plan. They enhance the protection provided by adding covers for critical illness, accidental death and more.

4. Premium Payment Flexibility

The premiums to an endowment plan can be paid out monthly, quarterly, semi-annually or annually. This flexibility allows policyholders to easily maintain their endowment plans.

5. Tax Benefits

Like with all insurance plans, there are tax benefits available for endowment plans too. They are available under Sections 80C and 10D of the Income Tax Act of India.

How are Endowment Plans Beneficial?

Endowment plans provide a risk-free avenue of savings. If you have a steady flow of income, you must definitely invest in an endowment plan to save up for a better financial future. The guaranteed returns at the end of the maturity period help provide for any important event in your life. Moreover, they also ensure the financial security of your family in case you are not present to provide for them anymore. 

You May Also Like to Read:- Term Insurance And Endowment Plan: 5 Major Differences

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