What Is The Term Endowment
Updated On Jun 28, 2022
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An endowment policy is a life insurance plan designed to pay a lump sum amount to you on completion of a predetermined term or to your beneficiaries on death. So it provides life cover and gives returns on your investment on policy maturity. It is a kind of forced savings and especially attractive for those who want some returns on premiums.
This plan has triple benefits – savings, wealth creation and insurance coverage. It is the right one for any age and income group.
Why do you need it?
- It is low risk.
- Helps you invest systematically and save regularly.
- It is not mere insurance but gives additional plan advantages like double endowment, education endowment and marriage endowment.
- Provides financial security for the family in case of your unexpected death.
- You can add riders to it, like critical illness, etc.
- You can avail of tax benefits on premium under Section 80C and on maturity benefits, death claim and surrender value under Section 10 (10D).
Who should buy it?
It is ideal for those who:
- Want more than just life coverage and are looking for long-term financial security.
- Want to provide financial protection to my family.
- Want to build a lump sum amount for future use.
- Have a regular source of income.
- Are professionals like doctors and lawyers, salaried persons and small businessmen.
- Do not mind lower returns against low risks.
When To Buy?
The sooner you buy it the lower your premium will be and the more you will get on maturity. But buy only when you are sure you can pay the premiums regularly and for a long time because surrender value is very low.
Factors To Keep In Mind When Buying Endowment Policy
10 factors that should influence your choice of plan and company:
- Your life stage
- Needs
- Income
- Risk appetite
- Premium rates
- Features and benefits
- Company’s bonus payment record
- Company’s claim settlement ratio
- Company’s customer service record
- Company’s financial standing
Conclusion
With an endowment plan, not only are you saving and investing your money, but you are also creating a safety net for your family members in your absence. Endowment Life Insurance understands the importance of your life and financial goals and is designed in exactly such a way.
Also read: Post Office Savings Account: Everything You Need To Know
