5 Things You Should Know Before Buying an Endowment Plan

Endowment funds are ideally fit for consumers who want security and financial support for their future investments. Endowment plans include a disciplined retirement account over a period of time for financial needs, along with a lifespan that covers the future expected savings for the family In the case of an unexpected passing of the policy holder.

What Are Endowment Plans?

An endowment policy is a life insurance policy that lets you build assured benefits for your financial objectives. This plan offers a death benefit as well as a maturity benefit. A guaranteed death benefit shall be paid in the event of the demise of the insured within the duration of the policy. In addition, if the life assured survives the entire policy term, the promised maturity payment will be compensated. In addition to these guaranteed benefits, an endowment plan provides you with guaranteed additions at regular intervals.

Also Read:- Features Of An Endowment Plan

5 Things You Should Know Before Buying an Endowment Plan

If you're thinking of buying a policy on endowment, here are few stuff you should remember-

1. Death with Survival Benefits

Endowment Policies are special in that they ensure the payment of compensation to the policy holder in the event that he/she survives the duration of the contract and therefore entitle his/her nominee(s) to collect the sum insured along with other extra incentives in the event of the policy holder's death during the term of the scheme.

2. Better dividends

The feature of additional incentives ensures that the total returns from the endowment scheme appear to be higher than the conventional life insurance plan or term insurance plan. Because, aside from the standard cost of insurance, the extra premiums due are combined, the incentives of the scheme are also greater.

3. Premium-payment frequency

In general, insurers selling endowment policies deliver very variable premium-payment terms. This ensures that the policyholder will pay the premium at the frequency chosen for his/her convenience. The frequency can be monthly, bi-annual, annual or even one-time lump sum payments.

4. Flexibility of the cover

The endowment scheme provides flexible protections and the insurance holder can opt to buy extra incentives in the form of riders such as partial/total injury riders, critical illness riders, accidental death riders, etc. This has a bearing on the payable premiums, but the range of coverage is becoming more flexible.

5. Income Tax Benefit

The endowment scheme comes with tax advantages since the premiums charged as well as the key benefits of the scheme (sum insured and maturity income) are available for tax exemption under Sections 80C and 10D of the Income Tax Act, 1961.

You May Also Like to Read:- Top Benefits Of Buying An Endowment Policy

All You Need To Know About An Endowment Policy

Conclusion

It is important to remember that endowment plans have the highest returns and insurance when used for long-term investments.There are several considerations that need to be weighed before you determine which policy to purchase, such as your personal needs, wages, risk aversion, current life, future needs, etc.