What Are The Variants Of Endowment Plans
Updated On Jul 14, 2022
Table of Contents
An endowment policy is a type of life insurance policy that offers a lump sum amount on maturity or on death. An endowment policy helps the policyholder to build a risk-free savings corpus and offers financial security to the family if there is any unfortunate event. An endowment policy offers life cover along with the benefits of a savings plan.
You can save regularly over a specific period to accumulate a significant corpus that you can enjoy at maturity. If the policyholder survives the policy term, they will get the Sum Assured in a lump sum. An endowment policy is a good option to help you meet financial goals such as the education of your children or their marriage, purchasing a house or even planning your retirement.
What are Different Types of Endowment Policies?
Endowment plans are considered one of the best financial tools that can help you achieve your milestones. Hence, it is necessary that you know the various types of endowment plans before buying one. Listed below are five different types of endowment plans that you can choose from as per your financial requirements and circumstances:
1. Unit Linked Endowment Plan
In unit linked endowment plans, the premium that you pay is divided into 2 parts. One part is used to purchase units in different investment funds as per your preference, and the other part goes toward your life insurance cover. This is often termed a Unit Linked Insurance Policy (ULIP) – one of the best saving plans that investors usually put their money in.
2. Guaranteed Endowment Plan
As the name suggests, under this plan, the policyholder receives guaranteed benefits. At maturity, the policyholder gets the Sum Assured along with any loyalty additions, if any. Apart from that, with the Guaranteed Savings Plan, if the policyholder survives the term, they will receive:
i. Guaranteed Sum Assured on Maturity, plus
ii. Guaranteed Yearly Additions, plus
iii. Guaranteed Loyalty Addition
3. Full/With Profit Endowment Plan
The policyholder receives the Sum Assured as promised at the time of buying the policy. However, depending on whether or not the company declares a bonus, the final payout, including the surplus amount, may be higher upon policy maturity or the death of the insured.
4. Low-cost Endowment Plan
Under such a plan, the life insured is allowed to accumulate funds, which are usually paid after a determined period. This plan is specially designed to help the policyholders build a corpus to secure their future or to help them pay off their loans and mortgages. Even if the policyholder passes away while the policy is in force, the nominees or beneficiaries will receive the Sum Assured.
5. Non-profit Endowment Plan
Such endowment plans offer guaranteed additions instead of bonuses since they do not participate in the profits of the life insurance company. This helps generate returns for the policyholder and also makes them attractive as compared to other plans in the market.
Conclusion
An endowment plan is one of the safest plans around in the market. It offers you life coverage for a certain period of time and also ensures that you receive a maturity sum after your policy comes to an end. The maturity amount here is guaranteed and is also enhanced by the policy’s yearly additions and other benefits. Thus, this amount can be used to achieve your long-term goals.
