Types Of Endowment Plans That Help You Grow Your Savings And Their Benefits
Updated On Sep 01, 2021
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Endowment policies are indeed a type of insurance coverage that blends insurance and savings benefits. Endowment strategy allows the insured to save some regularly over a period of time in exchange for lump-sum payment when the policy matures. The maturity fee is determined if the insured lives to the completion of the policy's term.
However, if the insured dies unexpectedly within the policy's term, the policy's beneficiary receives a sum assured as well as a premium. Furthermore, endowment policy aids in the creation of a financial buffer for the future, allowing one to satisfy both long-term and short-term financial goals.
Types Of Endowment Plans
Here are a few things about different types of endowment plans:
1. Unit Linked Endowment Plan
This is a fixed-term savings plan that also comes with life insurance. Under this plan option, the insured's premium is split into different units that are deposited in a specific equity fund specified by the insured. The return on investment of the fund is entirely contingent on market performance. Those with a high-risk appetite and a willingness to make a high return on investment may consider this plan.
2. Full/With Profit Endowment
The basic sum assured amount equivalent to the death benefit is granted to the insured person under this plan choice. From the start of the policy, this amount is guaranteed. Furthermore, the ultimate payoff to the insured is bigger because it comprises the total sum assured plus an additional bonus (if any).
Also read - 5 Things You Must Know About Endowment Policy
3. Low-Cost Endowment
This sort of endowment plan is designed to assist the insured in building a fund for the future, which must be paid after a set length of time. Low-cost endowment plans are commonly used to repay mortgages, loans, and other debts. If the insured dies during the policy period, the target amount is paid to the policy recipient as the minimum sum assured.
4. Non-profit Endowment
A sum assured amount is paid to the policyholder as a maturity benefit or to the policy recipient as a death benefit in non-profit traditional endowment insurance.
5. Guaranteed Insurance
Endowment insurance policies guarantee that a sum of money will be paid to you or your beneficiaries regardless of whether you live to the end of the policy's term or die before it expires. The full price of an endowment policy will be given to the insurer on the "maturity period" or to the life insurance policy recipient if the insured dies. The bonuses are not guaranteed under the policy. As a result, with endowment insurance, you get the best of both worlds: guaranteed policy benefits and non-guaranteed benefits.
Conclusion
Endowment insurance plans ensure that you or your beneficiaries will get an amount of money irrespective of whether you live to the finish of the policy's term or die before it expires. The full price of an endowment policy will be reimbursed to the policyholder on the "maturity date" or to the life insurance policy beneficiary if the insured passes away. The policy does not guarantee bonuses. As a result, you get the perfect blend with endowment insurance: guaranteed policy benefits and non-guaranteed benefits.
You may also like to read - Planning To Buy An Endowment Policy? Here Are 5 Tips To 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.
