Understand The Concept Of Endowment Plans
Published On Feb 04, 2022
Endowment policies are a form of life insurance policy that offers both insurance and investment benefits. Endowment plans enable the insured to save regularly over a certain length of time, resulting in increased coverage and savings. Endowment plans allow the insured to save regularly over a certain length of time in order to receive a lump-sum payment at the policy's maturity. The maturity amount is paid in order to receive a lump-sum payment at the policy's maturity. The insured lives for the duration of the policy. However, in the event of the insured's untimely death during the policy's term, the policy's beneficiary gets paid a sum assured amount as well as any bonus (if any). Aside from that, endowment policies aid in the creation of a financial buffer for the future, allowing one to satisfy both long-term and short-term financial goals.
Features of An Endowment Policy
Some characteristics of endowment policy are listed below:
- It serves as both an investment and a life insurance policy.
- Survival benefits, also known as maturity benefits, are paid out if the policyholder lives to the end of the policy's term.
- Liquidity in abundance
- The family of the life assured is provided with financial security in the event of the life assured's untimely death within the policy's term.
- In case of unanticipated events, you can take out a loan against your insurance.
- A tax exemption can be obtained through an endowment insurance.
Various Types Of Endowment Policies
Endowment plans are a sort of life insurance policy, but there are several distinct types of endowment policies to choose from. Different endowment plans serve varied purposes and have different qualities; the following are the various sorts of endowment policies:
- Unit Linked Endowment Plans: A unit-linked endowment plan is a savings plan that also offers life insurance for a set period of time. Part of the premiums paid in this form of the endowment policy is invested in various market-linked investment alternatives. The performance of the investment options chosen by the life assured determines the returns on this sort of endowment insurance.
- Full Profit Endowment Plans: Because of the bonuses declared on the endowment policy at the end of each policy year, full profit endowment policies allow for asset appreciation. The final payout is larger. The bonus will be given in addition to the maturity or death benefit.
- Low-Cost Endowment Plans: A low-cost endowment policy allows the life assured to build up a corpus that can be utilised to pay off debts.
- Non-profit Endowment Plans: Non-profit endowment policies are the most basic sort of endowment policies, and they pay a maturity benefit to the life assured at the conclusion of the policy term if the life assured lives to the end of the policy term. Such an endowment policy also includes a death payout in the event of the life assured's untimely death within the policy's term.
Endowment plans combine life insurance and investing instruments to provide wealth accumulation as well as life insurance. Participating life insurance programmes are known as endowment plans.