Mistakes You Can Avoid While Purchasing An Endowment Plan
Updated On Apr 23, 2021
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Endowment plans are a type of life insurance policy which serves as a savings plan. They help you accumulate your savings and appreciate them over time with the help of guaranteed additions while enjoying the benefits of a life insurance plan.An endowment plan helps you plan and save money systematically for meeting your short-term and long-term financial goals. It also helps you to keep your family and loved ones financially secured in your absence.
However, new buyers as well as experienced individuals often end up making some common mistakes while purchasing an endowment plan. Here, we bring to you a list of such common mistakes which you avoid at the time of purchasing an endowment plan.
Also Read:- Top 10 Endowment Plans In India 2021
Mistakes To Avoid While Purchasing An Endowment Plan
While purchasing an endowment plan you need to thoroughly research about every aspect of an endowment plan. Here are some tips that can help you avoid common mistakes made by people while purchasing an endowment plan.
1. Procrastinating Investment
Being a salaried person, investing money for good returns in future must be your first priority. When you decide to invest early it makes you invest for longer. Investing in an endowment plan will not only offer you good returns but you can also avail the benefit of having life cover at an early age.
2. Investing Without Knowing Different Types of Endowment Plans
In order to invest in an endowment plan, it is necessary to know about different types of endowment. There are 4 different categories of endowment plans that are Unit-Linked Endowment Plan, Full Endowment Plan, Low Cost Endowment Plan and Non Profit Endowment Plan. A part of the premium paid amount is used to purchase life cover and the remaining part premium paid amount is invested in profit and non-profit based investment tools.
3. Failing To Opt For Suitable Riders
You can purchase additional and optional coverages called riders in exchange for an extra premium amount through which you can enhance the coverage of your endowment policy. Some insurance providers offer critical illness riders, accidental death benefit riders etc.
4. Failing To Check Available Flexibility Options
You can choose to pay the premium of your endowment plan based on your inflow of income. Before finalising the endowment plan, choose a plan that offers the flexibility to choose the premium paying mode that is monthly, quarterly, half-yearly or annually.
5. Failing To Compare Different Endowment Plans
Other than comparing features and benefits of multiple plans make sure to choose a plan that is easily understandable. It is very necessary that you keep certain factors such as your income, risk appetite, your requirements, long-term objectives before purchasing the endowment plan. With addition to above mentioned factors, always compare different insurance companies and their endowment plans to choose a plan that best suits you.
You May Also Like to Read:- 5 Things You Should Know Before Buying an Endowment Plan
An endowment insurance plan is an excellent option that ensures financial protection for you and your loved. You can also avail the benefits of good returns along with regular goal oriented savings. You can consider the above mentioned factors to choose a plan that fulfils your insurance requirements.