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Different Types Of Endowment Policies In India

Updated On Jul 27, 2021

Endowment Policy is essentially a life insurance policy that offers savings facilities to the policyholders. The policyholder is assured a sum to be paid at the time of maturity or an unfortunate event. It inculcates saving habits among the people as it requires the policyholder to pay a regular premium which in turn yields a lump sum amount at the time of maturity of the policy. This lump sum amount fosters in realizing the long term goals of the individual like buying a car, building a house; higher education for children etc. In case the policyholder fails to survive the tenure, his/her nominees are paid with the assured sum along with bonus(if any).

Different Types Of Endowment Policies in India

It is important for a person to choose the best endowment plan among the available types, which suits their income, requirements and circumstances. 

  • Full Endowment Plans

They are also known as with-profit endowment plans.This plan includes the profit earned due to investment . These plans ensure that the insurer pays a predetermined sum assured to the policyholder, after the maturity of the tenure. In case of the demise of the policyholder, the sum assured is paid to his/ her nominees. Generally the maturity benefit paid after the policy matures, is higher than the sum assured, as the insurer adds bonus to this amount which is earned due to his investment using your premium. Therefore the policyholder or in the otherwise case, the nominee receives a lump sum amount.

  • Unit Linked Endowment Plans

This Plan is more beneficial to those persons who have a high risk appetite and also looking for a high returns investment. In this plan, a part of the premium amount is used for purchasing units under an investment fund. The volatilities in the market influence the final returns on the investment. The other part is utilized to provide life coverage to the policyholder. This plan is advisable, if the individual needs a long term investment of his/her funds in the capital market. 

  • Low- Cost Endowment Plans

In this plan, the amount of premium to be paid is comparatively low and it has its main focus on accumulating the policyholder's money. These plans are useful for the repayments of loans or mortgages of the policyholder. If anything unfortunate happens to the policyholder, then the minimum sum assured is paid to the nominees of the policyholder. 

  • Profit Participating Endowment Plans 

This is a hybrid Unit-Linked endowment plan which combines the high earning potential of ULIPs with guaranteed returns to make your investment safe from the volatilities of the market. The range of profits in this plan depends on the performance of the funds in the capital market.  But the benefit of this plan is that it assures a particular payout at maturity. Whatever may be the fluctuations in the capital market, the policyholder is guaranteed to receive this payback. In case of his absence in the world, his nominee receives this amount. This is a safe and secure form of investment. 

  • Non-Profit Endowment

According to this plan, the insurer doesn't offer any bonuses to the policyholder. It offers a  specified lump sum amount to the policyholder on the maturity of the policy or to the nominee, if an unfortunate event happens to the policyholder. You can take this policy, if you are only looking for life coverage. 


All types of endowment plans offer tax benefits to the policyholders. Though each of them provides you benefits in their own structure, one must choose wisely the best plan for them which suits their financial circles and requirements.

Also read 

Things to Consider Before Buying An Endowment Policy

Basic Features of Endowment Life Insurance

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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