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Things To Know About An Endowment Plan

Published On Aug 27, 2021

An endowment plan is a form of life insurance that rewards out a lump sum over a certain span of time (referred to as "maturity") or upon demise. Typical terms are 10, 15, or twenty years up to a certain age limit. Some insurance policies will payout in the case of a catastrophic illness.

The holder receives the surrender value, which is established by the insurance firm based on how long the policy has been running and how much has been paid into it. Conventional with-profits or unit-linked plans are the most common (including those with unitised with-profits funds).

There are numerous advantages to having a pension insurance policy. They can be used to save money in a low-risk manner. Policyholders have the option of deciding how much they want to pay each month and for how long they want to stay, which is usually 10 or 20 years.

Benefits Of Endowment Plan

Following are few things you must know about the benefits and perks of an Endowment plan:

  • Life Cover

Endowment plans provide a lump sum payment to the nominee in the event of the policyholder's death.

  • Maturity Benefits

Endowment plans are special in that they promise benefits upon maturity. The policyholder receives the sum assured as the maturity benefit at the end of the policy's term.

  • Payment Of A Premium

In most cases, the premium payment frequency can be set to suit your needs. The policyholder has the option of paying monthly, half-yearly, or annually. The total sum can also be paid in one go.

  • Increased Investment Returns

An endowment plan provides financial security by assisting you in building money over time in order to satisfy your family's financial goals. In comparison to a pure life insurance policy, the benefits awarded to the insured upon survival and the nominees upon death are larger.

  • Payment Of A Premium

The life insurance premium can be paid monthly, quarterly, half-yearly, or annually by the insured. The frequency with which you pay your premiums is up to you. Make sure, however, that you pay your payment on time.

  • Coverage Selection Flexibility

Additional coverage options include critical/terminal sickness, partial or permanent disability as a result of an accident, and accidental death, among other things. In the event that the insured suffers from either of these conditions, certain plans will waive the payment.

  • Survivability And Death Benefits

Not only does the insured receive the sum assured if he or she survives the policy period, but in the event of the policyholder's death, his or her nominee also receives the sum assured as well as any announced bonus.


An endowment policy is simply a life insurance policy that, in order to protect the insured's life, helps the policyholder save consistently over a certain period of time in order to earn a lump sum payment at the policy's maturity if he or she endures the policy term. 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. An endowment plan sure does assure a great deal.

Must Read: 

How To Compare Endowment Plans The Right Way?

Who Should Buy An Endowment Policy?

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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