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Reasons Why You Should Not Quit Endowment Plans

Updated On Aug 23, 2021

An endowment policy is essentially a life insurance policy that, in addition to protecting the insured's life, assists the policyholder in saving regularly over a certain length of time so that, if he or she survives the policy term, he or she can receive a lump sum payment at the policy's maturity. This maturity amount can be used for a variety of purposes, including paying one's retirement, children's schooling and/or marriage, or purchasing a home.

If the insured dies during the policy term, a life insurance endowment policy pays the full sum assured to the beneficiaries, or if the policyholder survives the term, the policy pays the full sum assured to the policyholder at the policy's maturity.

Reasons Why You Should Not Quit Endowment Plans

Endowment plans offer a host of benefits, considering which you should not quit an endowment plan in between the policy term. Let’s have a look into them -

1. Life Insurance Benefit

Your loved ones will always be looked after. The life insurance benefit provides a lump sum payment, guaranteeing that your members of the family can continue to live the lives you so carefully planned for them even if you pass away. This is a set sum that is paid to your legal heir or nominee.

For instance, a 35-year-old who buys the ICICI Pru Savings Suraksha spends a 30,000 annual premium in exchange for a 3 lakh death benefit. As a result, the insurance is ten times the amount guaranteed.

Must Read: Some Salient Features Of An Endowment Plans

2. Loan Benefit

Endowment policies can be used to obtain a loan. You can get a policy loan once your policy has a surrender value. These loans have relatively low-interest rates. Some ICICI Prudential conventional plans, for example, allow you to borrow up to 80% of the surrender value. The loan benefit assists you in arranging finances in an emergency or when all other options for obtaining funds have been exhausted.

3. Tax Benefit

Tax advantages are also available with endowment insurance plans. Section 80C of the Income Tax Act1 allows you to lower your taxable income by paying premiums. There are other tax advantages available when endowment policies mature. This allows you to save money on taxes during the policy's commencement, accumulation, and maturity stages.

4. Maturity Benefit

The maturity benefit is guaranteed as long as you pay your premiums on time and keep your endowment insurance active. This is a fixed maturity benefit amount that will help you achieve your financial objectives. The policy term, policy premium, premium payment term, age, and gender all influence the maturity benefit. In some policies, guaranteed additions may be available upon maturity. Aside from that, Accrued Reversionary bonuses and Terminal bonuses may be available in participatory policies.

Conclusion

Anyone, from a young professional to a senior citizen, can benefit from an endowment policy. Most of us have commitments to our families that we must fulfill. Also, most of us have long-term, non-negotiable goals that must be met regardless of the circumstances.

Choose an endowment policy if you want a low-risk plan that provides both insurance and investing benefits. An endowment plan is appropriate for you if you are searching for a lump sum maturity for long-term aims.

Also Read: Step by step guide for Purchasing The Right Endowment Plan


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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