What Are The Most Important Advantages Of An Endowment Policy?
Published On Mar 01, 2022
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While an endowment plan has many benefits at any age, purchasing one when you're young may give you even more benefits. The best time to buy an endowment plan is when you're in your late twenties. You'll have fewer responsibilities when you're young than when you're in your mid-30s or early 40s, but an endowment plan is always a good idea. Aside from that, adopting an endowment plan when you're young would aid in the development of a future corpus and provide financial security for your family or loved ones. The final payment for the mortality benefit and survival advantage of an endowment policy is larger and more uncommon than the benefits earned from a normal term plan, such as a life insurance policy.
Advantages of Buying An Endowment Policy
Some of the advantages of purchasing an Endowment plan include:
Endowment plans combine the advantages of long-term investing and insurance into a single package. Endowment plans give the recipient a lump sum maturity amount (modified after considering firm performance and premium defaults) in addition to the payment guaranteed in the event of the policyholder's death (or the cumulative amount minus unpaid premiums, whichever is higher). Endowment systems have a significant advantage in this regard.
For endowment programmes, a yearly bonus is normally declared and paid out as a percentage of the money guaranteed. In addition to the money guaranteed in the event of the policyholder's survival, additional bonuses accrued over the policy's duration are paid. If the candidate dies within the policy period, the nominee receives the death benefit, which includes the entire sum assured as well as the total cumulative benefit.
As a Fund
People who want to put money aside for a specific reason and then use it later will benefit from an endowment plan. Endowment Plans are popular among retirees because the money is guaranteed to be paid out when they retire. Some investors save aside money for a major life event, such as a child's wedding or college tuition. As a result, an endowment plan is ideal if you are employed.
Another major benefit of endowment plans is that you can pay your premium over a short period of time while still benefiting from the policy's benefits over time. If you cease paying premiums after a specific number of years, you may be eligible for a free paid-up insurance policy with a lower promised sum if you meet certain criteria.
Insurance firms can provide customers with additional benefits and riders, such as marriage/education endowment plans and double endowment plans. Endowment plans also allow policyholders to add riders for major surgery, serious illness, and other events for a nominal additional price.
Endowment policyholders can borrow money as needed from their plans, usually without putting up any collateral.
Benefits of Dual Taxation
Endowment plans have the added benefit of providing tax benefits under Section 80C on the annual premium and Section 10D on the death benefit, according to the Income Tax Act.
Endowment plans, while offering lower returns, are significantly safer and allow a person to meet all of their financial and insurance needs in one place. During a financial crisis, an endowment plan can be a lifeline, providing financial assistance and security to one's family both now and in the future.
You may also like: Learn How An Endowment Policy Can Help You Save Money On Taxes.
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.