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Everything You Must Know About Endowment Policy Before Purchase One

Updated On Dec 08, 2021

An endowment contract is a policy of insurance coverage that incorporates protection and assets into one package. It permits users to save consistently over a set duration of time to receive a lump sum payment at plan maturity if the client lives to see the end of the life of the policy.

According to the terms of ideology and circumstances, the client receives his/her sum assured at a future period. The insurance provider, on the other hand, will reimburse the sum assured (plus any bonus, if any) to the policyholder's designee in the event of the policyholder's unexpected death. Furthermore, it can be used to protect oneself or your children after pension, as well as to meet other funding requirements including financing for kids’ lives and/or weddings, or to purchase a home.

Everything You Must Know About Endowment Policy Before Purchase One

Below are a few features of Endowment plans you must know before investing in one:

  • Death Along With Survival Benefits

In the event of the death of the policyholder, the benefactor of the plan receives the amount promised as well as incentives. In addition, if the protected lives longer than the contract, he or she is entitled to the sum assured.

  • Higher Returns

An endowment program can enable you to develop a potential reservoir while also offering financial security for your family. An endowment plan's payment for life and funeral benefits is bigger than those of a pure life insurance payout, such as Term Plans.

  • Premium Payment Frequency

The single premium frequency is obtained by the coverage selected by the subscriber. Weekly, monthly, half-yearly, and yearly payments are all possible.

  • Flexibility In Cover

Riders such as severe sickness, total and permanent disability, and unintentional death can be added to the current plan to increase the life insurance coverage. Furthermore, a few plans provide premium payment waivers in the event of total permanent disability or serious sickness.

  • Tax Benefits

As per Section 80C and Section 10(10D) of the Tax Act, 1961, the beneficiary is allowed a tax-exempt status on insurance premiums, maturity, and ultimate distributions.

  • Low Risk

Standard Endowment Programs are considered to just be secure than other alternative investments such as Mutual Funds or ULIPs since the money is not invested immediately in equity investments or even the share market.

  • Choose A Plan With Riders

A few insurance providers include riders as a piece of permanent equipment, which you should take advantage of. Education endowment, double endowment plan, or marriage endowment policy are examples of additional benefits.

  • Additional Bonuses

Rewards are also declared by insurance providers. The bonus is the additional sum of money that an operator adds to the earnings and distributes to the client.

  • Examine The Flexibility Option

Consumers with ordinary income can choose normal endowment insurance from companies that offer endowment plans, but those with unpredictable revenue could choose a single payment method or a restricted monthly payment type from companies that offer endowment proposals.


Multiple kinds of endowment plans are accessible on the market. However, when picking the correct endowment policy, personal needs consider various criteria. When purchasing an endowment policy, take into account factors like income, a person's needs, their present life phase, and their risk appetite.

Also Read: 

Here's What You Need To Keep In Mind Before Buying Endowment Policy

Types 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.

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