Rider Benefits In Endowment Plans
Updated On Jul 28, 2022
Table of Contents
An endowment policy is a type of life insurance policy that offers insurance coverage against the risk of death of an individual due to natural or accident. An endowment policy is designed to cover such unforeseen and unfortunate events to protect your family and loved ones from the emotional and financial distress caused due to such events. An endowment policy is designed to cover the risk of death, in addition, if the insured outlives the policy tenure then he/she is eligible to receive ‘maturity benefit’ which on the other hand is not offered under a term insurance plan. Therefore, an endowment policy offers 2 main benefits i.e. coverage against untimely events like death or disability, and offers maturity benefit to the insured after completing the policy tenure.
Benefits of Endowment Policy
Endowment Policy offers a handful of benefits to the insured. This policy is designed to offer the following benefits to the insured. Let us understand the salient features of the endowment policies and what makes them so beneficial:
1. Maturity Benefit
Endowment policies are designed to create guaranteed savings by creating a pool of savings. These guaranteed savings creates a substantial amount that is paid to the insured as a ‘maturity benefit’ at the end of the policy tenure.
2. Death Benefit
In the event of the death of the insured during the policy tenure, the nominee receives the death benefit equivalent to the insurance cover opted by the insured at the time of policy purchase. In this manner, you can create a financial legacy for your loved ones.
3. Tax Benefit
Endowment policies can also be used as a tax-saving instrument as the premiums paid can be used to reduce tax liability under section 80C of the income tax act. Insured can avail tax deduction of up to INR 1.50 Lakhs on the premium amount.
4. Bonuses
An endowment policy is designed to create a pool of savings and if the insured purchases the full endowment plan then he/she is eligible to receive bonuses accrued over the years as a result of profits earned by the insurance company.
5. Riders
Endowment policies offer the facility to add riders to the base plan to make them robust. Policyholders can add various riders like accidental death benefit rider, critical illness rider, accident total or partial disability rider, family income benefit rider, etc. to the base policy and enhance the policy benefits.
6. Loan Facility
An insured can avail policy loan under the endowment policy. This facility is designed to help the insured to meet financial needs.
7. Surrender Benefit
Endowment Plans have a guaranteed surrender benefit, based on which loan is provided to the policyholder.
There are multiple other benefits available in endowment plans which vary and depend on the specific plan.
Endowment Insurance Riders
Riders are the optional benefits that can be added to the base policy to amplify the benefits of the base plan. Various insurance companies provide a wide range of riders to the insured to choose and opt. However, the following is the list of the most common riders that can be attached with an endowment policy.
-
Accidental death and disablement rider
As the name suggests, this rider is designed to offer additional benefit in the event of the death of the insured due to an accident. In other words, the nominee of such endowment policy shall receive a death benefit of the base plan and an additional death benefit in case of death of the insured due to accident.
-
Critical illness rider
As the name suggests, under this rider the insured shall be paid the rider sum assured in the event of diagnosis or detection of a critical illness.
-
Premium waiver rider
This plan is helpful if the policyholder is not in a condition to pay the future premium amounts of his/her endowment policy due to diagnosis of critical illness or in the event of total or partial disability.
-
Total or partial disability rider
Under this rider, the insured shall be paid the rider sum assured in the event of total or partial disability caused due to accident or natural. This rider is beneficial to overcome the financial and medical expenses incurred to the insured or his/her family.
-
Hospital Cash Benefit
This rider is designed to provide the insured with daily cash allowance in the event of hospitalization. This rider is helpful as it covers all pre-hospitalization and post-hospitalization expenses.
-
Family income benefit rider
It pays regular incomes to the family for a specific period after the insured dies during the policy tenure
Conclusion
An endowment plan is for individuals looking for a long-term investment plan for creating a savings pool and insurance cover both at the same time. The insurance cover offered under an endowment life policy differs from one insurance provider to another.
Also Read:
