Learn Why You Should Select an Endowment Plan for Your Retirement.
Updated On Jul 13, 2022
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Buying an endowment plan or endowment insurance is of great help if you are looking to generate savings for your future. If you invest in endowment insurance today, then upon the maturity of this savings plan, you would have enough money generated to cushion your post-retirement finances.
An endowment fund of a life insurance policy is a contract between an insured and an insurer that qualifies the designated beneficiary of the insured person to acquire the lump sum upon the death of the insured party.
Besides, it offers a host of benefits to the policyholder and their family throughout the period of endowment insurance, such as income protection insurance, tax* exemption, and life coverage, to name a few. For this very reason, you could also think of your endowment insurance as an income insurance policy. For certain types of endowment plans, you would even get a certain deposit according to the provisions of the policy at regular intervals, while others offer a lump sum on maturity. Let us now see how this income protection insurance can help during retirement.
Endowment Plan for Retirement
Many of us know endowment plans to be a source of financial protection for our loved ones, but did you know your endowment plan could help you save for your retirement? Now you must be wondering what benefits can investing in an endowment policy provide when it comes to retirement?
First off, it is vital to know that investing in endowment insurance policies generates monetary benefits at maturity, which can be used for varied purposes like funding one’s retirement independently, taking care of daily expenses, or meeting even more ambitious goals such as buying a house. Moreover, several endowment plans are explicitly structured to meet the needs of whole life protection, post-retirement needs, additional expenses, and pension.
Since the average life expectancy rate has been getting better, it is essential to note that we should be looking at longer retirements and maintaining a decent lifestyle in the long run. As you age, the medical expenses associated with advancing age increase too. For these reasons, it is important to live your life on your terms independently once you cross 60.
There are threefold benefits of investing in retirement endowment plans:
- Endowment insurance helps you generate a source of income in your golden years. You will obtain the lump sum endowment in most cases, or if you have opted for a guaranteed income plan, you would have a guaranteed source of regular income as maturity benefits. This will help you take care of your medical and regular expenses.
- It will help you in securing the future of your children, especially in your absence. Your endowment fund gets shifted to your beneficiaries in case of an eventuality of you, the policyholder.
- Finally, you get tax benefits of up to ₹ 1,50,000, and if you withdraw the insurance only after its maturity, most insured parties don’t have to pay a single rupee in tax. Certain exceptions are there for people who transfer endowment funds to their corporate bodies, real estate, or nominees.
What Are the Benefits of Endowment Policy?
An endowment policy offers varied benefits that make it worth buying. Life insurance can be a good investment because it helps the policyholder cover their personal loans and mortgage. This income protection plan provides the dependents of the insured person with income insurance, assures the insured and his/her/their family with stable peace of mind, goal-based savings, financial protection of loved ones, and a decent lifestyle.
Moreover, various top-ups and add-ons (premium dependent) can be added to make your policy more helpful, such as hospitalization cover, disability protection, etc. It is for these reasons your endowment plan is also a guaranteed income plan.
Conclusion
Investing in an endowment plan for retirement is a wise choice. Not only does it secure your unforeseen and inevitable future, but it also calms your state of mind, knowing that there are guaranteed returns available at your disposal. One should be familiar with the contract, premium payments, jargon, and their meanings before investing in an endowment plan for retirement. Contacting a professional for assistance is recommended.
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