Before You Buy An Endowment Policy, There Are A Few Things You Should Know
Updated On May 19, 2022
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Before selecting the plan that best suits your objectives, you must analyze your goals, requirements, investment goal, and other considerations. An endowment plan is crucial because it assures your family's financial security when you retire. It allows you to save for your child's education, your wedding, and the purchase of your dream house. In today's world, a basic investing plan is no longer sufficient. People are increasingly seeking a policy that combines the advantages of an investment and a savings plan. Endowment plans might be beneficial in this case. In this post, we'll look into endowment strategies in further detail.
Consider These Points Before Buying An Endowment Plan
Some of the advantages of endowment programs are as follows. Read on to see if an Endowment Plan is best for you.
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Long-Term Investing
While Endowment Plans may not provide the highest returns when compared to other pure investing products such as Mutual Funds and the like, they do help build a Long-Term Corpus. Many individuals profit from it since it forces them to save.
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Investing And Coverage
An Endowment Plan, as previously indicated, offers life insurance as well as the ability to invest in a number of assets. As a result, upon your death or the maturity of the insurance, whichever comes first, you will get a sizable quantity of money.
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Use Taxes to Your Advantage
Endowment plans, like most other forms of insurance, give a double tax advantage. 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 inapplicable non this situation.
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Loan
A loan can be financed via endowment insurance. Endowment plan loans are commonly available since they are long-term plans with a larger quantity of money guaranteed.
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As a Trustee
An endowment plan is beneficial to those who want to set money away for a certain purpose and then spend it later. Retirees choose endowment plans because the money is guaranteed to be paid out when they retire. Some investors put money away for a significant life event like a child's wedding or college fees. As a result, if you are working, an endowment plan is perfect.
Conclusion
A kind of insurance known as an endowment plan combines the benefits of both insurance and saving. With this type of insurance plan, you may save regularly and get a lump-sum payout when the coverage expires. Based on the conditions and circumstances specified, you will receive a guaranteed payment at the conclusion of the insurance period. If you die, the insurance company will pay the specified amount, plus any earned bonus, to the nominee named in the policy (if any).
Also read- Endowment Policy: What You Need to Know
