Top Five Benefits Of Purchasing An Endowment Policy
Updated On Feb 10, 2022
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Endowment plans are guaranteed-benefits savings-oriented life insurance plans. These programmes can be used for a period of ten to thirty years. If you want to reach a long-term financial goal, an endowment plan is the best option. It will be broken down into three sections: financial stability, protection, and attaining financial goals. While endowment programmes may yield lower returns, the investment risk is very low. There are commonly two clauses in endowment plans, namely. Profitable – In 'Profit Endowment plans,' additional benefits are provided at maturity in the form of Terminal and Reversionary bonuses, in addition to the sum assured. 'Without Profit Endowment plans' offer no additional benefits, and the plan can be compared to a Traditional Endowment plan.
Top 5 Benefits of Purchasing An Endowment Policy
The following are the top five benefits of purchasing an endowment policy:
1. Maturity Benefits And Death Benefits
An endowment plan is a unique investment option because it guarantees you a maturity benefit if you live to the policy's end of term. Furthermore, as a death benefit, if you die during the policy's term, your nominee will receive the sum assured, as well as other benefits. In this scenario, endowment plans provide both death and maturity benefits.
2. Low-Risk Strategies
Endowment plans are marketed as low-risk investments and are appropriate for investors with a low risk tolerance. These programmes do not work in a high-risk market and offer guaranteed payments. It broadens the scope of the strategy by allowing investors who aren't interested in the excitement of the stock market to participate.
3. Coverage Flexibility
With an endowment plan, you can get flexible coverage. Additional benefits, such as rider benefits such as accidental death and disability, critical illness, and so on, are available for purchase. If these riders were included in your Endowment policy, it would become considerably more flexible. It would, however, increase the policy's premium by a certain amount.
Because the option of further bonuses is available, the actual maturity benefit of an Endowment plan would be more than any other normal life insurance policy without the bonus. The advantages are higher because, in addition to the promised sum, a number of other reimbursable sums are available.
5. Premium payments can be made in a variety of ways
The majority of endowment plan providers offer various payment options for premium payments. You have the flexibility to pay your policy premiums whenever it is convenient for you. The premium payment frequency might be monthly, quarterly, or even a one-time payment of the lump sum amount.
6. Benefits from Taxes
Because the premium paid is deductible under Section 80C of the Income Tax Act of 1961, endowment insurance has tax advantages. If the value guaranteed is at least 10 times the annualised premium, the maturity benefits received through Endowment plans are also tax-deductible under section 10(10D) of the Income Tax Act of 1961.
Aside from these basic characteristics, endowment policies also allow you to convert your insurance into a paid-up policy. You can also use your Endowment insurance as collateral for a loan. However, you must pay the policy premium for a certain period of time in order to obtain these benefits, and you should check with your insurer to determine if your policy offers this option. As a result, before purchasing an Endowment policy to meet your specific financial goals, you must first understand the key features of an Endowment policy, such as the breadth of coverage, benefits, and so on.
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.