Top Five Benefits Of Purchasing An Endowment Policy.
Published On Feb 28, 2022 10:40 AM By InsuranceDekho
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Endowment plans are savings-oriented life insurance plans with guaranteed benefits. These programmes might last anywhere from ten to thirty years. An endowment plan is the greatest solution if you wish to achieve a long-term financial goal. It will be divided into three sections: financial stability, financial protection, and financial goal attainment. While endowment programmes may have lesser returns, the risk of investing is quite minimal. Endowment plans often have two clauses, namely. Sustainably profitable – In 'Profit Endowment plans,' in addition to the sum assured, additional benefits are paid at maturity in the form of Terminal and Reversionary incentives. There are no additional benefits to 'Without Profit Endowment plans,' and the plan can be compared to a Traditional Endowment plan.
Top 5 Reasons to Buy an Endowment Policy
The top five advantages of purchasing an endowment policy are as follows:
Death Benefits And Maturity Benefits
An endowment plan is a special type of investment since it promises you a maturity benefit if you live to the end of the policy's term. Additionally, if you die within the policy's term, your nominee will receive the sum assured, as well as other advantages, as a death benefit. Endowment plans provide both death and maturity benefits in this circumstance.
Endowment plans are touted as low-risk investments that are suitable for risk-averse individuals. These programs operate in a low-risk environment and provide guaranteed rewards. It broadens the strategy's appeal by allowing investors who aren't interested in the stock market's thrills to participate.
Flexibility In Coverage
You can have flexible coverage with an endowment plan. Rider benefits, such as accidental death and disability, critical illness, and so on, can be purchased. These riders would make your Endowment policy far more flexible if they were included. It would, however, raise the premium for the policy by a set amount.
The actual maturity benefit of an Endowment plan would be more than any other conventional life insurance policy without the bonus because additional bonuses are attainable. Because, in addition to the guaranteed money, a variety of alternative reimbursable sums are available, the benefits are greater.
Payments For Premiums
The majority of endowment plan providers provide a variety of premium payment methods. You have the option of paying your premiums whenever it is convenient for you. Monthly, quarterly, or even a one-time payment of the lump sum amount could be the premium payment frequency.
Endowment insurance gives financial advantages because the premium paid is deductible under Section 80C of the Income Tax Act of 1961. The maturity benefits earned through Endowment plans are likewise tax-deductible under section 10(10D) of the Income Tax Act of 1961 if the value guaranteed is at least 10 times the annualized premium.
Apart from these basic features, endowment policies also allow you to convert your insurance into a fully paid-up policy. Your Endowment insurance might potentially be used as collateral for a loan. However, in order to receive these benefits, you must pay the policy premium for a set length of time, and you should check with your insurer to see if your policy allows you to do so. As a result, you must first grasp the major aspects of an Endowment policy, including the breadth of coverage, benefits, and so on, before obtaining one to fulfil your personal financial goals.
You may also like: What Is An Endowment Policy, And How Does It Work?
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.