Benefits Of Endowment Plan
Updated On Oct 05, 2021
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Endowment insurance protects a person for a set length of time. As a result, the individual can assure himself for as long as he wants. In the event of the individual nominee's death, the sum assured and bonuses paid by the insurance firm for the years the policy was in force are received. The sum assured and bonus during the term of the insurance is paid to the policyholder upon maturity. Endowment insurance policies are divided into two types: profit-generating and non-profit-generating.
An Endowment Plan is your safest choice if you really want a policy that provides more than just life coverage. These plans are ideal for people of every age group, regardless of their saving ability, because they provide long-term wealth growth, insurance coverage, and regular goal-based savings. Even though endowment plans provide lesser returns, they are significantly safer and ensure that all of a person's financial and insurance needs are met in one place. During a financial crisis, an endowment plan can be a lifesaver, providing immediate and long-term financial support and security to one's family.
Benefits Of Endowment Plan
Let's have a look at the various benefits of Endowment Plan:
1. Double Tax Benefits
Endowment plans include a number of advantages, including tax advantages per Section 80C on the annual payment and Section 10D on the cash amount, according to the Income Tax Act.
The nature of endowment plans is that they are ephemeral.
3. Premium Flexibility
Premium flexibility is another significant feature of endowment plans. You can pay your premium over a short period of time while still receiving the policy benefits over a lengthy period of time. If premium payments halt after a specified number of years' worth of premiums have been paid, a free paid-up insurance with a smaller sum assured can be obtained - but only under particular conditions.
Insurance firms provide customers with additional perks such as marriage/education endowment plans and double endowment plans. An endowment plan also allows policyholders to pay a marginal premium to purchase additional riders such as major surgical help, severe illnesses, and so on.
5. Dual Benefit
Endowment plans combine long-term investment and insurance into one package. If the policyholder survives the policy tenure, the endowment proposal expects to be paid a lump sum competence amount (amended after contemplating customer experience and top-notch delinquencies), as well as paying the sum assured (or accumulated amount minus outstanding premiums, whichever is higher) to the beneficiary in the event of the policyholder's death. This is an important advantage of endowment policies.
Endowment plans are risk-free in terms of the total secured, even if the returns are lower.
6. Disciplined Savings
Policyholders must set away a predetermined amount for premium payment at a predetermined time interval, promoting a disciplined attitude to saving.
7. Guaranteed Bonus
Annual bonuses are usually given out as a percentage of the cash assured in endowment schemes. Additional bonuses accrued during the insurance term are paid in addition to the sum assured if the policyholder survives. The nominee receives the death benefit, which includes the whole sum assured as well as the total cumulative bonus if the policyholder dies within the policy period.
Because endowment plans are designed to be long-term investments, the longer the policy period, the better. Endowment plans are most effective when approached with a long-term outlook, as this stimulates regular savings over time. Flexi pay and single pay plans are alternatives to regular pay endowment programs for those with unpredictable income.
You may also like to read - Types Of Endowment Plans In India
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.