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What is the Need For Purchasing an Endowment Policy?

Published On Jul 27, 2021 6:00 PM By InsuranceDekho

In the Insurance protection sector, Endowment plans are a mainstream reserve funds and protection methodology. Endowment plans are bought for an assortment of purposes, including life coverage and the gathering of an investment account over the long run. Such plans consolidate the advantages of saving and protection with the confirmation of safety. 

What is the Need For Purchasing an Endowment Policy?

Following are the reasons you can consider putting your money into an endowment plan - 

  • Dual Benefits

Endowment plans join the upsides of saving and protection into a solitary arrangement. Charges stored at foreordained periods help build up a bank account that can be gotten to when required. These are long haul investment funds systems that guide in the improvement of a wellbeing net. From that point forward, endowment programs have been set up for both experienced and fledgling financial backers with an okay resistance. Endowment programs are a decent method to set aside cash over the long haul. 

With the development advantage,it designs additionally broadened life coverage cover, which delivers the total guaranteed to the designated recipients if there should be an occurrence of a disastrous occasion with the policyholder.

  • Tax Advantage

Under Area 80C of the Income Tax Act, you can guarantee allowances up to Rs. 1.5 Lakh for charges paid in a monetary year. This will guarantee a smooth exchange of cash with no problem in the hour of a crisis or when the aggregate is delivered upon the development of the arrangement.

  • To Secure Maturity And Death Benefits

Even if the policyholder lives to maturity, an endowment plan's maturity benefits dictate that the policyholder would receive a lump sum payout. The feature of an endowment plan separates it from other plans and ensures the security of the policyholder.

Benefits on Death Are As Follows:

If the life insured dies within the period of the plan, the firm will pay the following death benefit to the nominee:

  1. The Confirmed Sum in the Event of Death, plus
  2. Bonuses received at the time of death

The Death Benefit is capped at 105 percent of the total premiums paid up until the date of death (excluding any extra premiums).

  • Flexible Premium Payment Options

You may choose how much you want to spend for the premium. Payments can be made on a monthly basis or over time. This element improves the plan's flexibility. This might be advantageous to investors in instances of erratic revenue.

  • Comprehensive Protection Through Riders

Riders are extra advantages added to the endowment insurance plan's fundamental framework to make it more profitable to investors. These add-ons increase policy protection in particular situations.

Different riders are available depending on the insurer and may be discussed and changed while purchasing the insurance.

You can pick from the following riders in an endowment policy:

  • Rider's Accidental Death Benefits
  • Term benefit rider
  • Accidental Total And Permanent Disability Benefit
  • Rider for Critical Illness Benefits


In case you're looking for an arrangement that will furnish you with ensured benefits just as a tax reduction, an endowment plan is the best choice. It is an arrangement that is proper for individuals of different ages and investment funds capacities.The above article will acquaint you with the different explanations behind purchasing an endowment plan.

Also read 

Difference Between Endowment , ULIPs and Term Plans

Endowment Policy - Types, Benefits and Riders Explained

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.

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