Do I Need An Endowment Policy?
Published On Mar 09, 2022 10:30 AM By InsuranceDekho
An endowment plan is a lifesaver for those who have problems conserving money for a rainy day or who regularly buy things they don't need. An endowment plan is a sort of life insurance policy that works similarly to a savings account in that it pays out a lump sum of money when the policy expires or the policyholder dies. It's simply a cross between an investment plan and a risk management approach. An endowment plan protects the guaranteed person's life while also assisting the policyholder in consistently saving over the life of the policy. An endowment plan can be withdrawn prior to the policy's expiration date, with the policyholder receiving an amount determined by the insurance provider.
The Benefits of Purchasing an Endowment Plan
When deciding on an endowment strategy, keep the following aspects in mind:
1. Risk Protection
Endowment plans offer beneficiaries with a lump sum death payout in the case of a catastrophic tragedy. As a result, your family will be financially secure in the event of a financial emergency while you are away.
2. Maturity's Benefits
If the policyholder lives to the end of the policy term, the assured maturity benefit is paid. The one-time payment allows you to satisfy both long-term and short-term financial responsibilities and goals.
There is no investment or interest rate risk with risk-free endowment life insurance plans. Low-risk investments, on the other hand, typically provide low returns. To put it another way, you will not be able to save enough money to pay for your education. Because the gains on endowment life insurance contracts are taxed, your money may not even keep up with inflation.
4. The Advantages of Taxation
Endowment insurance is tax deductible under Section 80C of the Income Tax Act of 1961. This provision allows for tax breaks on endowment programme premiums. This clause allows you to save money on taxes when your insurance matures.
5. The Advantage of Lifetime Coverage
By paying an additional premium over the policy's premium-paying period, Extended Life Coverage can be added to a policy at the beginning.
6. Benefits for Riders
Endowment plans, like term insurance policies, contain additional benefits such as critical sickness coverage, accidental death benefit coverage, and premium waiver coverage.
7. Benefits upon death
Endowment plans also provide death benefits. The sum assured, on the other hand, may or may not be sufficient to cover your loved ones' financial needs.
8. Benefits that are guaranteed
If the Life Assured survives that period and all premiums are paid on time, you will get a Survival Benefit equal to 50% of the Sum Assured one year before the policy term expires, as well as a Sum Assured on Maturity benefit at the conclusion of the policy term.
Endowment policyholders are guaranteed a payout when their policies mature. This endowment insurance may be used to pay for a variety of costs, including children's schooling and marriage. An endowment policy can also be used to create a retirement fund or to purchase a home. In the event of the policyholder's untimely death, the assurer pays the whole amount promised (plus any extras, if any) to the policyholder's nominee. As a result, the financial condition of the policyholder's family remains unaffected.
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.