Figuring out Endowment Plans
Published On Oct 01, 2021 10:00 AM By InsuranceDekho
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In India, endowment insurance has always been popular. Endowment policies' popularity has waned since the introduction of ULIPs, but they remain popular. Your life insurance policy would almost certainly have become an endowment policy if you had purchased it 10 or 15 years ago. Endowment plans are a type of life insurance that can also be used as an investment vehicle. The family of the policyholder receives the insurance cover, also known as the amount assured, in the event of an untimely death at any point during the duration of the policy.
The policyholder receives a guaranteed amount (also known as the sum assured) and a bonus amount when the policy reaches maturity. The bonus may be declared every year by the life insurance company, but it is not guaranteed. This incentive is included in the plan's guaranteed benefits after it is announced. The bonus isn't paid out right away; it builds up over time and is only paid out when the policy matures or a death claim is filed.
Figuring out Endowment Plans
We'll look at how endowment insurance policyholders might assess their benefits after choosing an Endowment plan:
1. Examine The Choice For Flexibility
Individuals with regular income can choose a regular endowment policy from assurers that offer endowment plans, while those with irregular income can choose a single payment option or a limited premium payment option from assurers that offer endowment plans.
2. Guaranteed And Non-Guaranteed Returns
Many of these policies offer a combination of guaranteed and non-guaranteed returns in addition to low-risk insurance and the dual advantage of death cover and savings. Guaranteed payouts, such as guaranteed increments, are set in stone and only paid out at death or maturity (as applicable). Non-guaranteed returns include bonuses that are variable in nature and based on investment success.
The insurance firm will declare bonuses based on the performance of the company. At the end of each financial year, the assurer distributes a portion of the earnings generated by its investments to policyholders. Furthermore, the value of an insurance company's assets and liabilities determines its profit.
4. Prepare Ahead Of Time
When it comes to investing, the rule of thumb is that the earlier you start, the better, because it gives you a long time to grow your money. As a result, the assured will be able to save more effectively and establish a corpus.
5. Choose A Plan With Riders
Some insurance providers include riders as a standard feature, which you should take advantage of whenever possible. Education endowment, a twofold endowment policy, or a marriage endowment policy are all examples of additional benefits.
Various types of endowment policies are available on the market. However, when picking the correct endowment policy, an individual needs to consider various criteria. When purchasing an endowment policy, consider factors like income, a person's needs, their present life stage, and their risk appetite.
Premium costs are also a decisive factor, as endowment plans have higher premiums than other investment plans. Other considerations include the insurance provider's bonus history, customer service, claim settlement percentage, financial status, and so on. Simply put, you should select an endowment policy that is simple to understand and does not include any difficult-to-understand features or benefits.
Also read - Useful Tips To Purchase An Endowment Plan
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.