Why Go For Endowment Policy?
Published On Nov 29, 2021 10:00 AM By InsuranceDekho
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Endowment policies include life assurance, which means they will payout if you die while the policy is active. You make regular payments into your endowment known as premiums, which are used to pay for your life assurance policy. The cost of this life insurance will be determined by your gender, age, and the length of endowment required. The remaining funds are invested either with profits or on a unit-linked basis.
When it comes to investing in life insurance, an endowment policy is a very wise choice. It is a policy that provides you with the necessary life insurance coverage as well as the benefit of long-term savings after a set period of time - it is thus a combination of insurance and a savings scheme. The time period is typically set between 5 and 20 years, after which the policyholder can withdraw the matured amount. In the event of the policy holder's death, the amount is paid to his or her nominee. A standard term life insurance policy benefits only the policyholder's nominee(s) after his or her death.
Why Go For Endowment Policy?
Below are a few reasons why you must go for an Endowment policy:
1. Collect The Details Of Your Endowment Policy
Before you sell your endowment, you must first determine which assurer provides this service, as well as your policy number, the maturity date, the value of your endowment policy, and the type of endowment policy you have. You should also compare the value of TEP market offers and your surrender value.
2. Verify That Your Endowment Is Marketable
Most businesses will only buy with profit endowments, which should be at least a year before the maturity date and no more than 20 years. They might also be hesitant to purchase a policy with a surrender value of less than £3,000 if it has a surrender value of less than £3,000.
3. Do you really need life insurance?
You would lose the benefit of life insurance if you sold your endowment. If you have an endowment in addition to an existing mortgage, your recipients will not obtain any pay-out if you die, and any outstanding mortgage balance may remain unpaid.
4. Two In One Benefit
When you buy an endowment policy, you get life insurance as well as a savings plan. You will be assured of receiving a certain sum once the policy matures, after a time period that you specify. The premiums you pay over time will be reinvested in various schemes, and the bonus amounts from these will be added to your credit, resulting in a sizable sum once the time period is up. If the policyholder dies before the policy matures, the amount is paid to the nominee.
5. Tax Benefit
The best part about purchasing an endowment policy is that the matured amount is a tax-free lump sum. This is also a tax-free investment; premiums of one lakh rupees or less are not taxable. Furthermore, according to the Income Tax Act, the amount received in the event of the policy holder's death is tax-free.
6. Significant Savings
Many people purchase endowment policies as a way to save for a later event in their lives, such as their children's further education, marriage, or their own retirement. As a result, this is a valuable policy for retirement purposes, as policyholders receive a substantial sum of money to sustain them in their old age. Furthermore, because the monetary returns on such plans are higher, policyholders can obtain loans against the surety of their endowment policies.
7. Regular Payouts
An endowment plan also provides the benefit of additional income. An endowment plan provides an annual bonus based on your endowment plan. The annual bonus is an agreed-upon percentage of the policy's promised payout. The annual bonus amount is usually paid as maturity benefits at the time of maturity, but in the event of an unfortunate contingency involving the individual, these benefits are passed along with the insurance benefits.
The endowment plan is an intriguing policy that solves a few problems and checks all the boxes related to financial security and financial independence, namely, savings, investments, and insurance, while also providing a few additional benefits that are specific to endowment plans. It is a unique policy that provides dual benefits of investment and insurance under the same policy at no additional cost for the complimentary benefits. It also offers a unique set of benefits that become additional income benefits at the time of maturity or insurance compensation.
You may also like to read - Things You Should Know About Endowment Policy
What Is The Need To Purchase Endowment Policy?
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.