Learn Why Endowment Insurance Is A Good Investment
Updated On Feb 21, 2022
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Endowment plans are savings-oriented life insurance plans with guaranteed benefits. These programs can be used for a 10 to thirty-year span. An endowment plan is the greatest way to achieve a long-term financial goal. It will be divided into three sections: financial stability, financial protection, and achieving financial goals. While endowment programs may produce lesser returns, the investment risk is quite minimal. Endowment plans often have two clauses, namely. Lucrative – In 'Profit Endowment plans,' in addition to the sum assured, additional benefits are paid at maturity in the form of Terminal and Reversionary incentives. 'Without Profit Endowment plans' provide no additional advantages and are comparable to Traditional Endowment plans.
Top 5 Advantages of Purchasing an Endowment Policy
The top five advantages of purchasing an endowment policy are as follows:
1. Death Benefits And Maturity Benefits
An endowment plan is a one-of-a-kind investing choice since it promises a maturity benefit if you live to the end of the policy's term. Furthermore, if you die within the policy's term, your nominee will get the sum assured, as well as other advantages. Endowment plans provide both death and maturity benefits in this circumstance.
2. Strategies with Low Risk
Endowment plans are marketed as low-risk investments, making them suitable for investors with a low-risk tolerance. These programs do not operate in a high-risk market and do not provide guaranteed payments. It broadens the strategy's scope by allowing investors who aren't interested in the stock market's thrill to participate.
3. Flexibility in coverage
You can have flexible coverage with an endowment plan. Rider benefits, such as accidental death and disability, critical illness, and so on, are available for purchase. If these riders were included to your Endowment policy, it would become far more flexible. It would, however, raise the premium on the policy by a set amount.
Because further bonuses are available, the actual maturity benefit of an Endowment plan would be greater than that of any other standard life insurance policy without the bonus. The benefits are greater since, in addition to the guaranteed money, there are a variety of alternative reimbursable sums available.
5. Payments for premiums
The majority of endowment plan providers offer a variety of premium payment methods. You have the option of paying your policy premiums whenever it is most convenient for you. The payment frequency of the premium could be monthly, quarterly, or even a one-time payment of the lump sum amount.
6. Advantages of Taxation
Endowment insurance gives financial advantages because the premium paid is deductible under Section 80C of the Income Tax Act of 1961. The maturity benefits earned through Endowment plans are likewise tax-deductible under section 10(10D) of the Income Tax Act of 1961 if the value guaranteed is at least ten times the annualized premium.
Aside from these fundamental features, endowment policies allow you to convert your insurance into a paid-up policy. Endowment insurance can also be used as collateral for a loan. However, in order to receive these benefits, you must pay the policy premium for a set length of time, and you should check with your insurer to see if your policy includes this option. As a result, before obtaining Endowment insurance to fulfill your personal financial objectives, you should first grasp the major aspects of an Endowment policy, such as coverage breadth, benefits, and so on.
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.