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Meet Endowment Plans, Your Partner for a Secure Financial Future

Updated On Jan 17, 2022

The assurer has the right to deny any claim made under the policy if there is even the tiniest inconsistency in the information provided by the policyholder.

In general, insurance is a contract based on a set of principles between an assurer and an assured party. According to one of these principles, both contracting parties must act in good faith. To put it another way, the policyholder must be entirely honest and accurate when presenting information to the assurer, and the assurer must be equally honest and transparent in their service to the policyholder.

Many consumers overlook this rule and supply their assurer with false or incomplete information. Whether it's for a life insurance policy, a health insurance plan, or even a car insurance policy, this almost always results in their claim being denied. For a variety of reasons, insurance claims are denied. We'll go over some of the other reasons your insurance claim can be denied.

Meet Endowment Plans, Your Partner for a Secure Financial Future
Meet Endowment Plans, Your Partner for a Secure Financial Future

Below are a few things you must know about Endowment plans that make them the financial partner for you:

1. Take Advantage Of The Loan Against Policy Option

Your endowment policy can be used as a savings and life insurance tool, as well as loan security. You can use it as collateral when asking for bank loans because it has a surrender value.

The loan amount is determined by the policy's surrender value, the number of premiums paid, and the number of years completed. The loan amount is proportional to the surrender value.

2. Savings And Assured Benefits Provide You, Peace Of Mind,

Savings is a habit, and endowment programs can help you keep up with it. This is because these plans compel you to pay premiums on a regular basis, which helps you develop a disciplined savings habit. The premiums are higher than pure term life insurance plans because these plans include a savings component (for the same sum assured).

Endowment plans shield your family from financial risks while also allowing you to acquire wealth and create a secondary source of income. A money-back feature is available on one of these goods, allowing you to receive periodic payments at pre-determined times. These can help you achieve your short-term objectives.

3. Life Insurance And Savings In One Package

Protecting your dependents against financial contingencies while also preparing for future demands and responsibilities may be a priority as a breadwinner for your family. Both of these objectives can be met with the help of an endowment strategy.

This type of life insurance satisfies your desire for both protection and savings. In the event of the policyholder's untimely death within the policy period, the sum promised is paid to their beneficiaries. On the other hand, if you live to the end of the insurance period, you will receive a lump sum payment (maturity benefit).

4. Your Expenses Should Be Budgeted

Obviously, the first step is to budget your spending so that you can plan to spend your money more wisely. The most crucial aspect is how you budget your expenses. Initially, you may consider each expense on your expense sheet to be significant.

So, how does the budget affect your life? Budgeting mainly entails deferring non-essential expenditures and growing your present savings. It's rare that the goal is to save money.

The amount of time you can put off non-essential expenses is determined by your and your family's resilience and lifestyle. Long-term benefits, on the other hand, are equally lucrative for those who can wait.

5. Death Benefit

The death benefit is the entire sum paid by the insurance company to the beneficiary or nominee in the event of the policyholder's untimely death. The sum assured or the fund value, whichever is greater, can be used. What your recipient receives is determined by the plan you choose. The death benefit can be received as a lump sum or in monthly installments by the nominees.

6. Maturity Benefit

When a policy's tenure expires, the policyholder is offered a maturity benefit. Section 10 (10D) of the Income Tax Act 1961 allows you to receive a tax-free maturity amount, subject to the provisions set forth therein.


If there is no nominee, an insurance company will request paperwork to verify the line of succession. This is a complicated mechanism that causes delays in receiving claim funds. When a young person buys a term plan, the nominees are frequently his or her parents. If the nominee fails to update their nomination after their death, the claim may be rejected. A nomination is quite important when acquiring a term insurance policy. Always double-check the information and make sure it's current.

You may also like: Planning to Buy an Endowment Plan? Here’s What You Should Consider

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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