Benefits Of Buying An Endowment Plan
Published On Oct 26, 2021 10:00 AM By InsuranceDekho
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A solid endowment policy gives us the security and tax-free returns we need to meet future emergencies while also allowing us to achieve our non-negotiable life goals, such as paying for our children's school, marriage, or living a dignified retirement on our own.
Endowment policies are dual-purpose life insurance policies. You can utilize an endowment policy to develop a risk-free savings account while also protecting your family financially in the event of a disaster. An endowment plan's simplicity has made it a popular savings option for people of all ages over the years. If you die during the policy's term, your loved ones will receive the money you specified in an easy-to-receive manner. As a result, an endowment plan serves as a financial safety net for you and your family.
When it comes to investing, each individual faces two dangers. The first is the possibility of losing one's life. What happens if they pass away? What happens to their investment plans? Life insurance comes in handy here. In the event of the policyholder's death, the insurance company pays the money assured to the nominees.
Benefits Of Buying An Endowment Plan
When choosing an endowment plan, you should consider the reasons listed below:
1. Risk Protection
Endowment plans offer a lump sum death benefit to the beneficiaries in the event of a catastrophic occurrence. As a result, your family will be financially secure in the event of a financial emergency while you are away.
2. Maturity Benefits
If the policyholder lives to the end of the policy term, the guaranteed maturity benefit is paid. The lump-sum payment allows you to achieve both long-term and short-term financial demands and goals.
3. Tax Benefits
Under Section 80C of the Income Tax Act of 1961, endowment insurance is eligible for tax benefits. This clause allows for tax deductions on premiums paid for endowment programs. This provision also allows you to save money on taxes when your policy matures.
There is no investment risk or interest rate risk with risk-free endowment life insurance policies. On the other hand, low-risk investments typically yield modest returns. To put it another way, you won't be able to save enough money to pay for college. Because the gains on endowment life insurance policies are taxable, your funds may not even keep up with inflation.
5. Rider Advantages
Endowment plans, like term insurance policies, have extra benefits such as critical illness coverage, accidental death benefit coverage, premium waiver coverage, and so on.
6. Benefits Upon Death
Endowment plans include death benefits as well. However, the sum assured may or may not be sufficient to satisfy your loved ones' financial needs.
7. Guaranteed Benefits
Get a Survival Benefit of 50% of the Sum Assured one year before the policy term ends, and a Sum Assured on Maturity benefit at the conclusion of the policy term if the Life assured survives that period and all premiums have been paid on time.
8. Extended Life Coverage Benefit
An opportunity to select Extended Life Coverage at the policy's start by paying an additional premium over the policy's premium-paying term.
Endowment policyholders receive a guaranteed payout when their policies mature. These endowment policies are suitable for handling a variety of financial obligations, such as paying for children's education and marriage. An endowment policy can also be utilized to construct a retirement fund or to purchase a home.
In the event of the policyholder's untimely death, the assurer pays the entire sum promised (plus any bonuses, if any) to the policyholder's nominee. As a result, the financial condition of the policyholder's family stays unaffected.
Also read - Key Features of 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.