Why an Endowment Plan is Your Partner for a Secured Financial Future?
Updated On Aug 28, 2021
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An endowment plan is one of the most sought after life insurance plans as it offers the policyholder dual benefits of savings and life insurance under a single plan. This type of life insurance plan is like a passport to a safe financial future for you in various ways. An endowment plan alongside life insurance also provides the policyholder with maturity benefit at the end of plan duration. Some of the benefits that one can avail after purchasing an endowment plan are as follows:
1. Serves Dual Objective: Life Insurance and Savings
Being the sole breadwinner of your family, it is significant for you to protect your family members against financial liabilities as well as savings in order to create wealth for future requirements. With an endowment plan, you can take care of both these objectives. This type of a life insurance plan meets the dual need for savings and life insurance. In the event of unforeseen death of the policyholder within the plan period, the nominees would receive a sum assured, whereas if the policyholder survives the plan period, then they would get a lump sum known as maturity benefit.
2. Avail Loan Against Insurance Cover
An endowment plan would not just act as a life insurance and savings tool but can even be mortgaged to get a loan. As these plans have a surrender value, they can be presented as a collateral at the time of applying for loans from any financial institutions or banks. The amount of loan is dependent upon the surrender value of the plan, total number of premiums paid and the overall number of completed years. The higher the surrender value, the higher would be the amount of loan.
3. Get Peace of Mind with Assured Benefits and Savings
With an endowment plan one gets to practice the habit of saving in their day to day life. This is because one needs to pay premiums on a regular basis, thus, ultimately helping you to build a habit of saving in a disciplined manner. Since these insurance plans provide a savings component along with life cover, the premiums payable are more in comparison to pure term life insurance (for the same amount of sum assured).
These plans offer safety to your family against financial uncertainties, and assist you in accumulating wealth and create an alternate income source.
4. Tax Benefits
An endowment life insurance plan provides dual tax benefits. As per section 80C of the Income Tax Act, a policyholder receives tax benefits towards the premium paid up to Rs 1.5 Lakhs maximum. Moreover, the maturity benefit received from the plan is tax free as per section 10(10D) of the Income Tax Act.
An endowment plan helps the policyholder in enjoying the benefits of a life cover, goal-based savings and long term wealth creation. These plans act as a saviour for a person during financially tough times and help them in tiding through the hard times with ease.
Also Read: What Does Pure Endowment Mean?
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.