Is It Beneficial To Invest In An Endowment Plan?

Endowment plans can be used as both a life insurance policy and an investment vehicle. These plans pay out a lump amount in the case of the life assured's untimely death or when the plan reaches maturity. Endowment plans can also assist you in growing your money. Aside from the benefits of an endowment plan, there are several more reasons to invest in one. Continue reading to find out why you should invest in an endowment plan.

Why Is It Beneficial To Invest In An Endowment Plan?

Some of the reasons why an endowment plan is a prudent investment are as follows:

Dual Procedure

Endowment plans are a sort of life insurance that has two functions. This type of plan offers both life insurance and long-term investment advantages. This implies that the life assured may enjoy the benefits of a life insurance policy while simultaneously building a corpus that can be utilised when the time comes.

Advantages of Earning Extra Income

An endowment plan might provide you with additional income. You can benefit from a yearly incentive declared on your endowment plan. These yearly incentives might be a particular percentage of the sum assured. This yearly bonus is provided in addition to the maturity benefit when the account reaches maturity.
In the event that the life guaranteed dies unexpectedly, the nominee will receive both the yearly bonus and the death benefit.

Advantages of Taxation

An investment in an endowment plan is eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Furthermore, the proceeds are free from taxation under Section 10(10D) of the Act.

Risk-Free Returns

Endowment plans produce inadequate returns while being seen as risk-free. Endowment plan returns are risk-free. Endowment plans guarantee returns after a specified time period if premiums are paid on a consistent basis, and these returns are risk-free.

Payment of Maturity and Death Benefits

A death benefit is paid out by an endowment plan since it is a type of life insurance. The death benefit is paid to the nominee in the case of the life assured's untimely death. Aside from the death benefit, the life assured is entitled to a maturity benefit at the conclusion of the policy term if he or she lives to the end of the policy term. The life guaranteed can get the maturity benefit as a lump sum payment.

Option to Increase Coverage

Endowment plans offer both life insurance and long-term investment options, but riders can be added to improve your life insurance coverage. Riders can be added to a standard life insurance policy to expand the available coverage. Accidental death benefit, accidental permanent disability benefit, total and partial disability benefit, hospital cash benefit, premium waiver benefit, critical illness benefit, and other life insurance riders are all prevalent.

Conclusion

An endowment plan is a kind of life insurance that also functions as a vehicle for investment. Aside from serving a dual function, an endowment plan may be quite useful to those looking to develop a corpus for future financial requirements. Endowment plans may offer you additional income to assist you in meeting your financial goals.

Also Read: Before You Buy An Endowment Policy, You Should Learn Everything You Can About It