Endowment Plan - Features and Benefits
Updated On Aug 24, 2021
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The need for saving is met through an Endowment Plan. It's straightforward, straightforward, and transparent. Endowment plans are meant to pay out a lump sum payment at the end of the policy term, also known as maturity, or upon the policyholder's death. It offers the policyholder a living benefit in the form of payouts in addition to insurance coverage.
The policyholder receives the proceeds at death or after a predetermined number of years of premium payments. Endowment plans are suitable for kid education and marriage savings, in addition to the basic benefits described above.
Features of Endowment policies
The following are some of the most important aspects of endowment policy:
Benefits of Death and Survival
In the event of life assured’s death before the policy maturity date, the nominee/beneficiary receives the sum promised as well as any bonuses. In addition, if the assured outlives the insurance, he or she is entitled to the sum assured.
An endowment plan not only protects the policyholder's family and dependents financially in the event of the assured's untimely death but also helps create a corpus for the future. An endowment plan's payout can be substantially bigger than that of a standard life insurance policy, whether it's the survival benefit or the death benefit.
Endowment policies are less risky than other investment plans such as mutual funds or ULIPs because the money isn't invested directly in equity funds or the stock market.
Also read: Some Salient Features Of An Endowment Plans
Benefits of Endowment Policies
The following are some of the advantages of endowment policies:
An insurance business may declare several different sorts of bonuses. A bonus is a sum of money that an insurer adds to the proceeds and distributes to the policyholder. Only with-profit policyholders are eligible for a share of these profits, and the payment of this bonus is contingent on the life insurer having surplus cash after claims, fees, and expenses have been paid for the year.
Rider provides an additional advantage of accidental death with a death benefit to policyholders who choose it. In other words, the nominee receives an accidental death benefit in addition to the death benefit if the policyholder dies in an accident. The rider has proven to be one of the most beneficial because it gives financial assistance to the policyholder in the event of a permanent or partial disability.
The assured receives the sum assured plus bonus for the term of the policy if he or she survives the policy's term or the policy's end or maturity. The sum due at the end of the term is tax-free. An endowment policy's maturity benefit is this. Up to a particular age restriction, typical maturities are ten, fifteen, or twenty years. In the event of a critical illness, some insurance will pay out.
Endowment plans provide a structured approach to developing a corpus that will benefit the assured's dependents in the event of a financial emergency. To accomplish their long-term financial goals, small business owners, salaried workers, and professionals such as lawyers and doctors must purchase endowment plans. Endowment plans are advantageous since they are long-term investments that generate higher returns over time.
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.