Everything You Need To Know About Endowment Policy
Published On Jun 21, 2021, Updated On Jun 22, 2021
Table of Contents
- Types of Endowment Plans
- Benefits of Endowment policy
- Things To Look Out for While Buying An Endowment Plan
Endowment policy promotes saving while also guaranteeing that the policyholder shall receive a lump sum payment even if the policyholder survives the maturity period. It is essentially this nature of the endowment plan that makes it a more profitable option for the investors. It is an ideal plan in the market as it comes compounded with insurance protection, maturity benefit and tax benefit.
Types of Endowment Plans
Following are the types of endowment plans that you can choose from:
Unit-Linked Endowment Plan
The premium paid under this plan gets branched into two streams, one towards insurance policy and the other towards investment in the funds of your own choice.
Participating Endowment Plan
This plan combines the bonus if declared by the company, with the sum assured, leading to a higher final payout. In this plan, the basic sum assured as much as the death value is guaranteed to the policyholder from the beginning of the policy.
Must Check:- Life Insurance Company
Non-Participating Endowment Plans
Under this plan, the sum assured is paid as a death benefit to the beneficiaries or as maturity benefits to the policyholder is completely ridden with bonuses, unlike participating endowment plans. This feature of non-participating endowment plans makes them easy to understand.
Benefits of Endowment policy
Following are the four of several benefits you can avail yourself by investing in an endowment plan:
In case of the demise of the policyholder, the beneficiary gets provided with the assured sum. The endowment plan, with this, also offers the survival benefit where the policyholder receives the assured sum upon the maturity of the policy.
Must Check:- Life Insurance Benefits
Low Risk Investment
When compared to the unending options in the market regarding insurance policy, an endowment plan is a relatively safer option when it comes to investing your money, as it guarantees a safe return of the money, even if the policyholder survives the maturity period.
Offers Long Term Saving Opportunities
If stashing your money safely interests you, then is it recommended that you invest your money in an endowment policy. It encourages long term savings, which could be easily accessible when needed.
Must Check:- Life Insurance Claim Settlement
Additional bonuses, if any, declared by the company, get added to the sum that you can avail when the policy matures or will be added to the death value provided to the beneficiaries/ nominees in case of the demise of the policyholder.
Things To Look Out for While Buying An Endowment Plan
Listed below are the few things to be noted while buying an endowment policy:
Seek Available Riders
It is important that you go through the riders offered by your insurer and avail the inbuilt benefits of riders effectively.
The types of riders offered to depend from insurer to insurer but it is crucial it is in the knowledge of the policyholder to unlock them when necessary.
You may also like to read:- Why Buying Endowment Plans Online Is A Good Option?
Select The Suitable Type Of Endowment Plan
Since the market displays a variety of options when it comes to endowment plans, it is bound to put you in a confused state of mind. Therefore, It is important that you review the plan thoroughly, select the one suitable to you and your risk tolerance.
Look For Flexibility of Premium Payment
Depending on your income, it is necessary to choose an option that will give you the power of depositing premium payment at your comfort. Hence, in case of an irregular income, you can choose to pay a single one-time life insurance premium or limited premiums.
Also Read:- Top 5 Endowment Plans For Wealth Appreciation
While investing in an insurance plan is a big decision, which might put you on a path of unending research, leading to frenzy. Listed above are crucial details you must know before investing your money in an endowment policy, from the types of plans to things you should be on the lookout for.
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.