One of Amit’s cousins, Rahul recently called him to know where to invest for his newborn son. He wanted to start saving for his higher education. Amit was filled with pride when he realized that his younger brother, Rahul, wished to start saving and building a financial plan even before his son turned a year old. Amit explained, “Rahul, there are multiple investment options that you can go ahead with, however, apart from mere investment, it is also important that you take the necessary steps towards securing your family during uncertain events. Thus, it would be ideal to invest in a plan which takes care of the financial security of your family and also helps you accumulate wealth.” “But there are so many plans available. Which one should I choose?” Rahul asked.
Amit replied, “You should choose a plan which secures your dreams and aspirations and also fulfills your family obligations. An endowment plan is designed to do precisely that. You get the dual benefit of life insurance as well as wealth accumulation. Moreover, it brings tax benefits on two fronts, on the premium amount paid and on the sum assured received. Endowment plan motivates you to save and protect you and your family in the time of crises or in your absence.
Let me tell you the topmost reasons why you should buy an endowment plan?
Endowment plans are suitable for investors with low-risk appetite and for specified defined goals. For instance, your child is just born. You are aware that 15 years later, you’d be needing a lump sum amount for his higher education. This amount is something that you may not be comfortable relying on market factors considering the inevitability of the expense. Hence, you’d want to invest it in an instrument which will give you guaranteed returns. With assured returns, you can plan for future as you are well aware of the amount that you would receive on maturity.
Apart from a fixed sum at maturity, any time before maturity, if the policyholder meets with an untimely demise, the nominee will get the full Sum Assured. All these proceeds are tax-free and also, the amount that you invest today in an endowment plan will earn you a rebate in income tax under section 80C. For instance, if you make an annual premium payment of Rs.15000/- the same would be deducted from your income while calculating the taxable income.
The most important thing is endowment plans are safe investments. You get guaranteed returns up front. At the time of maturity, you receive the assured maturity amount as well as a bonus that the insurer may announce every year.
I strongly suggest you include endowment plans in your financial portfolio as it has its own distinct benefits.”
After taking all the valuable insights on life insurance from Amit, Rahul thanked him and made up his mind to buy an endowment plan to give his child a future without any risk and worries.