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Significant Features of an Endowment Policy

  4/3/23 2:24 PM

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Do you always end up splurging your money in things that are not necessary? Do you end up thinking why did I spend my entire salary? Do you always think about saving but somehow you are unable to? Then an Endowment plan is for you!

An Endowment Plan caters to the need for saving. It is simple, upfront and transparent.

What is an Endowment Plan?

Endowment plans are designed to pay back a lump sum amount after the policy term which is also known as maturity or on death of the policyholder. It provides a living benefit to the policyholder as a payouts along with insurance coverage.

The policyholder gets the returns either at death or after certain years of the premium payment.

How Does an Endowment Plan Work?

By saving a fixed amount of money over a set period, an endowment plan can provide a monetary benefit when withdrawn, differentiating it from a standard savings plan. If you live through the designated term, you can withdraw the accumulated funds as a maturity benefit. However, if you pass away unexpectedly, your nominee will receive the amount as a death benefit. This policy can therefore benefit not only the policyholder but also their family members or dependents.

What are the Important Features of an Endowment Plan?

  • An Endowment plans serves dual purpose savings and protection
  • On maturity, a pre-determined will be paid to the policyholder
  • In case of demise, the beneficiary would be entitled to the sum assured or the maturity amount, less outstanding premiums, whichever is higher
  • The returns are earned on a compounding basis along with some loyalty additions
  • High Liquidity
  • One can also get loans for unforeseen expenses.
  • It also provides tax benefits under section 80C
  • The returns are also tax exempted under section 10 (10D)

In addition to the basic benefits discussed above, endowment plans are ideal for child education and marriage savings. If you are looking for a plan which gives you guaranteed returns along with tax benefit then an endowment plan is the most appropriate option. It is a right policy for the people of any age group and saving capacity. An endowment plan will bring stability in your financial portfolio.

Why Do You Need Endowment Plan?

An endowment plan is essential to safeguard your dreams and obligations, ensuring they are secured for you and your loved ones. This plan offers the dual benefit of life insurance and wealth accumulation through regular investing, with the added advantage of tax benefits on both your premium and maturity corpus.

If you are responsible for significant future expenses, an endowment plan is a risk-free investment that provides guaranteed returns. In the event of your passing, your beneficiaries will receive a lump sum amount, while surviving the policy's term guarantees a guaranteed maturity amount. This ensures that you and your loved ones remain protected at all times.

Overall, an endowment plan serves as a motivating factor to save for your future and protect your loved ones in your absence or during times of crises.

 

Swati Tumar - Travel & Finance Writer

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.

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