Key Features of Endowment Policy
Updated On Oct 22, 2021
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Endowment insurance policies come with a wide range of benefits. If a policyholder dies, this plan provides financial assistance in the form of the sum assured and incentives to the policyholder's family. In addition, this plan assists policyholders in creating a savings pool for themselves, which they receive at the policy's maturity and can either reinvest or use to enjoy life or accomplish financial goals such as monthly bills, child's education, marriage, vacation, and so on. As a result, an endowment plan is a risk-free investing strategy that pays you a consistent amount after a certain period of time if you pay the premium on time.
With insurance coverage and financial soundness provided by survival and maturity benefits, an endowment policy gives you a sense of security. It's difficult to come across such an investment tool, but it's useful to have. However, because this is your money, you should learn everything you can about the policy before purchasing it. We trust that the information provided above will assist you in understanding the policy's essential characteristics.
Key Features of Endowment Policy
Below are a few key features of an Endowment plan:
Provides Death Benefit
It also comes with a death benefit. Since it is a combo of an asset and a life insurance policy, this plan provides life to the life assured. If the life assured dies during the policy period, the candidate obtains the entire sum assured amount. Even if you aren't present, this plan assures that your family has enough money to pay the bills.
Serves Dual Purpose
Dual Purpose Endowment plans are a type of insurance products plan that offers life assured both life insurance and an investment opportunity. This strategy can provide a financially comfortable future for you and your family members. You can expand your reservoir to guarantee that you have enough money to satisfy your future needs.
Provides Maturity Benefits
In contrast to life insurance, this strategy contains a maturity benefit. If the life promised survives the entire insurance period, a maturity bonus is guaranteed. With the help of this method, you may invest your money in the long run. This benefit will encourage you to save money in a systematic way.
Offers Guaranteed Additions
Endowment plans are contributing policies, which implies the insurance provider will announce incentive schemes on the insurance on an annual basis. Endowment plans ensure improvements after the premium payment term finishes. If the life guaranteed dies during the policy term, assured enhancements are made to the death benefit, or to the maturity benefit when the plan matures.
The premiums paid for a life insurance policy are tax-deductible under Section 80C of the Internal Revenue Code of 1961. Under Section 10(10D) of the Income Tax Act of 1961, the maturity amount receivable is likewise tax-deductible.
Endowment plans are private insurance that provides specified benefits in terms of a total sum assured plus different bonuses to the policyholder at the end of the plan's term or to the policy holder's nominee(s) in the case of the policy holder's death before the end of the term. Endowment plans are essentially insurance products with the added benefit of offering the investor a savings option. An endowment plan provides main plan advantages, such as a sum assured to the policyholder's nominee(s) in the event of the policyholder's death during the policy term, as well as the opportunity to obtain maturity bonuses if the policyholder survives the policy period.
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.