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Things To Remember Before Buying An Endowment Plan

Updated On Jun 25, 2021

An Endowment plan is a two-fold plan that offers you two kinds of assurances - savings benefit and insurance protection. The investor pays a fixed recurring amount for a fixed period of time and gets the returns plus added benefits upon maturity and if the policy holder dies during the time period the sum assured plus bonus is paid to the nominee.

Things to Keep In Mind Before Buying An Endowment Plan

Following are the things required  before signing up for an endowment plan

1. Understand The Different Types Of Plans

Catering to the needs of a wide demographic of investors, an endowment policy has different kinds of plans. From participating to non- participating plans, investors must understand the difference and benefits offered by the varying plans before making a final decision.

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2. Assess Flexibility Options

Endowment plans serve the investors with the flexibility of paying premiums, which can come in handy in cases of irregular or fluctuating income. It is important to pick an alternative that will allow you to provide installment in association with your comfort space. Thus, if there should be any contingencies regarding your income,  you can decide to pay a single one-time life insurance premium or limited premiums. 

3. Opt For Premium Waiver Option

The premium Waiver advantage states that if there should be an unfortunate occurrence with the policyholder, the entirety of the guaranteed sum will be delivered to the nominated beneficiary and the future premium portions will be waived off by the company. Investors must check for the premium waiver option while buying an endowment plan as it ensures that the policy will remain unblemished till fulfillment.

You may also like to read:- Top 5 Tips To Buy An Endowment Policy  

4. Select Suitable Riders

Endowment plans offer riders of a ranging spectrum, which should be considered by the investor before buying the plan. It is important that you understand the riders offered by your insurer and avail the inbuilt advantages of riders adequately. From the accidental death rider, to the rider offered for critical illness, it should be within the knowledge of the investor to tally them with the premium paid and select the rider accordingly to be used in the future if needed.

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5. Select Plans According To Your Risk Appetite 

While associating with the market to invest in Insurance plans, you will be exposed to various risk options. While some investors are more suited to risk, some prefer a plan promising more security. Therefore, the buyers must keep in mind their willingness to participate in market risk before picking an insurance plan. Endowment plans are taken out for a long term, and hence require the prerequisite to be agreed upon early on. 

Also Read:- What Happens When An Endowment Policy Matures?

Bottom Line

Endowment plans are a safe option to pick for your dual purposes of building a corpus while weaving a safety net of insurance cover. Before buying an endowment plan, it is recommended that you take into consideration the above factors to enhance your understanding of the subject. 

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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