5 Things To Consider When Purchasing An Endowment Policy
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An endowment policy is a form of policy that combines the advantages of insurance with the advantages of investment. A policy of this type offers insurance coverage, with the nominee receiving the money guaranteed in the case of the policyholder's death. This provides a high level of financial security since it helps your loved ones meet their financial obligations even when you are not around. Endowment plans give a lump sum payment upon policy maturity in addition to insurance coverage.
If you want to get the benefits of both wealth creation and insurance coverage, investing in an endowment saving plan is the best option. Keep the five tips below in mind when you seek for such insurance.
5 Things to Consider When Purchasing an Endowment Policy
Some of the advantages of endowment plans are as follows. Continue reading to find out if an Endowment Plan is a good investment for you.
Long-Term Financial Investment
While Endowment Plans may not provide the best returns when compared to other pure investment products such as Mutual Funds and the like, they do help to the growth of a Long-Term Corpus. In truth, it helps many people by forcing them to save.
Insurance and Investing
As previously stated, an Endowment Plan provides both life insurance and the ability to invest in a range of assets. As a result, upon your death or the maturity of the insurance, whichever comes first, you will get a substantial quantity of money.
Profit from Taxation
Endowment plans, like most other types of insurance, give a tax credit on both sides of the transaction. Because the Sum Assured in a Traditional Endowment Plan is always larger than ten times the premium paid, the premium paid is tax-free up to Rs 1 lac per year under section 80C, and the Maturity Benefit is tax-free under section 10(10)D. As a result, the new IRDA standards have no application in this scenario.
Loan
A loan can be financed via an endowment insurance. Endowment Plan loans are often available since they are long-term plans that offer a larger quantity of money.
As a means of saving
Endowment plans are perfect for people who want to save money for a specific purpose and then use it later. Endowment plans are popular retirement benefits because the funds are guaranteed to be paid out when the individual retires. Some investors put money aside for a significant life event, such as their child's wedding or college tuition. As a result, if you are working, an endowment plan is ideal.
Conclusion
Endowment plans are a type of insurance that combines the benefits of both insurance and savings. With this type of insurance plan, you may continually save and receive a lump-sum payment when the policy expires. Based on the terms and circumstances specified, you will receive a guaranteed payout at the end of the insurance period. If you die, the insurance company will pay the guaranteed sum plus any earned bonus to the nominee named in the policy (if any).
Also read- What Makes Endowment More Preferable To Term Insurance?
