Know About The Benefits Of Purchasing An Endowment Policy
Published On Jan 24, 2022
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An endowment plan is essential because it assures your family's financial security after you retire. It allows you to put money towards your child's education, marriage, and the purchase of your dream home. In today's world, a basic investment strategy is no longer sufficient. People increasingly want the advantages of both an investment and a savings plan in a single policy. In this case, endowment plans may come in beneficial. We'll take a closer look at endowment plans in this post. Before selecting the plan that best suits your objectives, you must evaluate your goals, requirements, investment target, and other considerations.
Benefits Of Purchasing An Endowment Policy
The following are some of the benefits of purchasing an Endowment plan:
1. Dual Benefits
Endowment plans bring together the benefits of long-term investing and insurance in one convenient bundle. In the case of the policyholder's death, endowment plans pay the beneficiary a lump sum maturity amount (adjusted after considering company performance and premium defaults) in addition to paying the sum guaranteed (or the cumulative amount minus unpaid premiums, whichever is higher). In this aspect, endowment schemes have a substantial benefit.
2. Assured Bonus
An annual bonus is usually announced for endowment programmes, and it is usually paid out as a proportion of the money guaranteed. Additional bonuses accrued over the policy's duration are paid in addition to the sum provided in the event of the policyholder's survival. The nominee receives the death benefit, which includes the entire sum assured as well as the total cumulative benefit, if the candidate dies during the policy period.
3. As a Fund
An endowment plan is perfect for people who want to set money aside for a specific purpose and then spend it later. Many people choose Endowment Plans as retirement benefits since the money is guaranteed to be paid out when they retire. Some investors put money aside for a significant life event, such as their child's wedding or college tuition. As a result, if you are employed, an endowment plan is ideal.
Another big advantage of endowment plans is that you can pay your premium over a short period of time while still reaping the benefits of the policy over time. If premium payments stop after a set number of years, you can get a free paid-up insurance with a lower sum promised if you meet certain criteria.
4. Additional Riders
Customers can get extra advantages and riders from insurance companies, such as marriage/education endowment plans and double endowment plans. An endowment plan also allows policyholders to pay a small additional premium to add riders for major surgery, serious sickness, and other things.
5. Facility for Loan
Endowment policyholders can borrow money from their policies as and when they need it, usually without putting up any collateral.
6. Benefits from Dual Taxes
According to the Income Tax Act, endowment plans have the added benefit of offering tax benefits under Section 80C on the annual premium and Section 10D on the death benefit.
Even while endowment plans have lower returns, they are much safer and allow a person to meet all of their financial and insurance needs in one spot. An endowment plan can be a lifeline during a financial crisis, offering financial help and stability to one's family both now and in the future
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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.