5 Things You Should Know About Endowment Plans

In today’s age, everyone is looking for plans that can help grow your investments. You must be looking to fulfill the financial goals for your family such as money to pay for child’s education or marriage, buying a new home, going for a family vacation abroad, etc.

In order to achieve your life’s goals, it is a right move to invest with an endowment policy. An endowment policy is a life insurance policy available with the savings feature. With life insurance coverage, it provides financial security for the family, in the event of your untimely demise during the policy term. The maturity amount payable helps you to fulfill your financial needs.

1. Guaranteed Returns

Endowment policies offer low returns available with low risk. It offers the dual benefit of death cover and savings feature. These policies offer upfront guaranteed returns and they are not linked to the market’s performance. The guaranteed returns such as guaranteed additions remain fixed and are payable on death or maturity (as applicable).

2. Bonus

The insurance company usually declares bonuses, depending on how the investments have performed. When an insurance company makes profits from its investments, it distributes a part to its policyholders at the end of each financial year. The profits or surplus of a life insurance company is determined after the valuation of its assets and liabilities.

Under an endowment policy, Simple Reversionary Bonus and Terminal Bonus are added to the sum assured and payable on death or maturity under the policy. Simple Reversionary Bonus is declared annually and accrued to be payable on death or maturity claim. Terminal Bonus a type of loyalty bonus and is paid only at the time of maturity of the policy.

3. Long-Term Financial Planning

An endowment policy yields high returns when you maintain it for a long term. When you buy an insurance endowment plan, the benefits are payable, only in case of death or maturity claim. Surrendering the policy is not advisable, as it provides you meagre returns. You are required to choose a policy term that helps you to achieve savings and fulfill your financial objectives.

4. Premiums & Benefits

With endowment policies, a portion of the premium amount goes towards the mortality component and the remaining amount of the premium is invested to earn returns. Under this policy, you can avail death or maturity benefit as a lump sum of sum assured plus accrued bonuses and/or guaranteed additions, as applicable under the policy chosen. This policy ensures financial cover for your family plus builds a corpus till the maturity of the policy. It is a 360- degree financial plan that provides you & your family a complete financial cover.

5. Circumstances to Buy an Endowment Plan

When you have a regular source of income and are looking to achieve the goal-based savings along with financial security for your family. You can seek to invest with an endowment policy to build a corpus.

With savings feature, you can meet several financial obligations for your family. It also ensures financial security and in the event of your demise, the insurance company pays your family the sum assured amount.

Conclusion

An endowment plan provides life insurance coverage along with the savings component. It helps you to accumulate the wealth with the help of bonuses or guaranteed additions available under the policy. With life insurance cover, you don’t need to worry about the financial future of your family, even in your absence. It is thus a ‘must buy’ plan. You only need to compare the features, benefits & cost of endowment plans online and then choose the one that fulfills your financial objectives.

 

Siddhant Dubey - Writer & Photographer

Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.