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Make Sure You Know These 5 Things Before Buying An Endowment Plan

Updated On Aug 05, 2021

Endowment plans are purchased for a specific length of time and provide both life and death payments to the policyholder. The policyholder retains the promised sum, plus any bonuses earned during the policy term (if any). Beneficiaries are notified if money is not received. Before investing in an endowment plan, investors are exposed to a variety of opinions and arguments. This article describes an endowment plan in great depth to assist you decide whether or not to purchase one.

Investing In Endowment Plans: What Every Investor Should Know

Following is what Investors must know before investing in an endowment plan -

1. Premium Payment Frequency 

In general, insurers that offer endowment plans offer flexible premium-payment options to their customers. Policyholders are able to set their own payment schedule. As well as monthly, bi-annual and annual payment options there is also the option of making a single one-time lump amount payment

2. In Addition To Death Benefits, Endowment Plans Reach Maturity.

The dual benefit of endowment plans sets them apart from other types of programmes. With an endowment plan, you can save and insure at the same time. Regularly deposited premiums can be used to build a savings needed

3. Using It As A Risk Free Option

They believe that their money is at risk from a range of market risks when it is invested in insurance plans
Investing in endowment schemes provides investors with security and a guaranteed return on their investment.
These plans, which may be customised to meet your needs, offer risk-free returns

4. A Single Plan With Many Benefits

Surviving beneficiaries and maturity advantages are also available through endowment plans Upon the policyholder's death, the Survival benefit kicks in. Unlike other insurance programmes, the policyholder's financial security is protected through an endowment plan

5. Security Is Ensured By This Product

This is a well-known aspect of endowment plans. As a result, during the policy term, money is created. An insured person is entitled to the insured amount plus additional bonuses if they live to the end of their insurance period ( if any). Contingencies can be dealt with in this manner.

6. Income Tax benefit

Due to Sections 80C and 10D of the Income Tax Act of 1961, both the premiums payable and the major plan benefits (the sum assured and the maturity proceeds) are tax-exempt.

Bottom Line

There are many different opinions on insurance products available to investors. A thorough understanding of the primary parts of the plan is therefore necessary. Be familiar with the key characteristics of endowment programmes, which were covered in the article above, before you invest.

You may also like to read - Invest In Endowment Plan To Fulfill Your Financial Goals

What Riders Should Be Added Under Endowment Plans?

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.

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