Is Endowment Plan A Good Investment?
Updated On Jun 25, 2021
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Endowment plans provide a wide array of benefits of long-term saving, while also extending an insurance cover to the policyholder. The sum assured in the policy is released to the beneficiary in case of unfortunate events relating to the life of the policyholder. Endowment plans function as a shield for your family even when you're not around.
Why Investing In An Endowment Plan Is A Good Idea?
Following are the reasons explaining why buying an endowment plan is a worthy idea
1. Promotes Systematic Savings
Endowment plans inspire the saving plans of the investors and keep them running in the long term. Such plans help secure the premium as a saving corpus, which can be retrieved when needed. As long as the premium is timely deposited, as discussed in the policy, the saving corpus functions effortlessly.
2. Survival and Death Benefits
Under endowment plans, the policyholder is guaranteed the sum assured with the accrued bonuses the policyholder survives the maturity term. In cases of loss of the life assured, the nominated beneficiaries receive the sum assured with the bonuses ( if any). Therefore, endowment plans have both survival and death benefits to offer to the investor.
3. Premium Waiver Option
Waiver of Premium can either be an in-built feature of the endowment plan or can be opted later as a rider. This feature ensures that in case of the demise of the policyholder, the policy runs its full course without any interruption by waiving off any future premiums.
4. Loan Option
Endowment plans allow the policyholder to proceed with a loan against the policy. This feature, in some plans, might take some time to activate and the interest will be charged on the outstanding loan at a rate of interest set by the company, from time to time. In case the policy matures during the period of the loan, the company is entitled to deduct the outstanding loan amount with all the pending interest before making a payout.
5. Tax Benefits
Under Section 80C and Section 10 (10D) of the Income Tax Act, 1961, no taxes will be levied on premium payments and final payouts falling under the endowment policy. This can be listed as a benefit because the final payouts that will be received by the nominated beneficiary, will not be crippled by taxes, making sure your family will receive the full amount in times of need.
Endowment plans unpack a lot of options in front of the investors. Mentioned above are a few reasons why investing in an endowment plan can be beneficial to investors. By choosing optimal riders while buying an endowment plan, in addition to the above benefits can bring to you a plan that will fetch you assured returns in the long run while maintaining the promise of security.
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.