Know How To Purchase A Right Endowment Plan

A typical life insurance plan will be of benefit to you if you are seeking a life insurance policy that will give life insurance as well as assist you to save money for your future goals with a regular return. Endowment plans, money-back plans, and whole-life insurance policies are examples of classic life insurance policies. The premium is calculated based on your age, the length of the policy for which you want coverage, and the sum assured (life insurance amount).

Know How To Purchase A Right Endowment Plan

Below are a few things to know before purchasing Endowment Policy:

1. Life Insurance Is Offered By Endowment Plans

Life insurance protection is one of the most important features of endowment plans. As a result, in the event of your untimely death, your loved ones will receive a guaranteed death benefit (sum assured) to help them get through the financial difficulties they are experiencing while you are away. Endowment insurance aims to become the primary source of income in such situations in order to protect your family. This sum assured aids your family members in meeting their day-to-day expenses as well as achieving short- and long-term objectives.

You can also get extra protection against life-threatening illnesses and diseases. You can either get a guaranteed sum or have your premiums waived once and for all if you choose this option.

2. Your Wealth Grows With Endowment Savings Plans

Through the payment of one-time or fixed premiums, endowment plans assist in instilling the habit of regular saving. But, more importantly, they assist you in increasing your income/ earnings by providing you with mid-to-high returns on your premiums. The value of returns generated varies between market-linked and non-linked endowment insurance plans. Market-linked endowment plans provide higher returns, but they also come with the risk of losing money. The more common non-linked endowment plans offer moderate returns with no risk. Endowment plans are a great option for those who don't want to take high risks with their investments because they are risk-free. These returns are paid to you in the form of a maturity benefit, which is a fixed and guaranteed lump sum payment.

3. Endowment Insurance Provides You With Extra Benefits

Endowment plans reward you with a variety of bonuses if you stay invested for the long term, which boosts the value of your maturity benefit. Terminal bonuses, reversionary bonuses, and loyalty additions/boosters are all examples of bonuses that increase the total value you receive at the end of an endowment savings plan. There are two provisions in the Income Tax Act of 1961 that provide tax relief: 

The premiums you paid to secure the benefits of the endowment savings plan can be claimed as refunds under section 80C. In a given year, you can claim a total refund of up to $150,000.

4. Additional Advantages Are Provided

If you choose an endowment savings plan, you will earn additional benefits. For example, if your endowment insurance plan has a necessary lock-in period of 3 to 5 years, depending on the endowment plan, you can take a loan against it and make partial cash withdrawals in an emergency. There is also the option of paying premiums in one lump sum or in monthly installments. In addition, if you stop paying your premiums, the endowment savings plan reduces the overall amount of your sum assured/maturity benefit by the number of premiums paid. This lower paid-up sum assured is contingent on meeting certain criteria and telling the assurer.

Conclusion

Endowment plans should be included in your insurance and investment portfolio. These are an appealing alternative for those who don't want to take on any market risks while investing because they provide the combined benefits of life insurance protection and wealth growth at no risk. Higher education, marriage, retirement, vacation, and other long-term aspirations can all be accomplished with the proper endowment plan.

Also read-How Endowment Policy Can Help You Secure Yourself?

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.