Is Buying An Endowment Policy Really Beneficial?
Updated On Sep 17, 2021
Table of Contents
Every individual requires a risk-free, guaranteed investment based on their financial needs. As a result, endowment plans should be purchased to cover three areas: first, to safeguard and provide financial stability for loved ones, second, to accomplish a financial goal, and third, to create savings to achieve long-term investment goals. However, if you want to acquire a regular premium plan, you should only do so if you have a consistent source of income to pay the premiums on a regular basis.
Because endowment plans are long-term investments with higher returns over time, they are advantageous. One of the most compelling reasons to invest in an endowment plan is that it allows you to save money in a methodical manner in order to achieve your long-term financial objectives. This plan also offers life insurance and the opportunity to build a corpus for a financially secure future.
Reasons Why Buying An Endowment Policy Really Beneficial
Below are few reasons why buying an Endowment Policy really beneficial:
1. Provides Life Insurance
Circumstances can change and are surprisingly unpredictable. The family of the policyholder may incur financial difficulties if the policyholder dies. An endowment plan pays the money assured to the loved ones if such a tragic event occurs during the insurance period. If the policyholder was the family's sole breadwinner, this amount would be used to replace his or her income.
2. Offers A Disciplined Route For Savings
Premiums for your endowment plan must be paid every month, quarterly, half-yearly, or annually, depending on the terms and circumstances of your policy agreement. This develops the habit of saving on a regular basis in you. You pay your premiums on time to ensure that you get a lump sum at the end of the term that you can use in the event of a financial emergency.
3. Provides Bonus
An endowment plan provides a yearly bonus. This sum is expressed as a percentage of the total guaranteed amount. If the policyholder dies within the policy period, the nominee is entitled to the sum assured as well as the whole collected bonus. If the policyholder lives to maturity, he or she will be entitled to the sum assured as well as any additional bonuses collected throughout the policy period.
4. Offers Tax Benefits
One of the most compelling reasons to invest in endowment insurance is to lower your tax burden. You may be eligible for a tax credit on the premiums you pay for your coverage under Section 80C of the Income Tax Act of 1961. In addition, under Section 10D, the death benefit is tax-free.
5. Assists In Achieving A Variety Of Life Objectives
Because endowment programs pay out the money they gather at the conclusion of the period, you can utilize it to achieve your own long-term objectives. Apart from keeping it as a safety net to cover your retirement needs.
Because endowment plans pay out the money they gather at the conclusion of the period, you can utilize it to achieve your own long-term objectives. They could include your child's further schooling, a deposit on a new home, or the purchase of a new car, in addition to keeping it as a safety net to meet your expenditures in your elder years.
Also Read: How Do Endowment Insurance Policies Work?
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.