Basic Features of Endowment Life Insurance

What Are Endowment Insurance Plans?

Endowment plans are a part of insurance policies which provides a life insurance cover to policyholders in case of demise along with maturity benefits upon their survival at the end of the policy term. The sum assured of the policy is paid in a lump sum to the policyholder after the maturity of the policy term while it is given to the policyholder’s nominees in case of his or her death. 

Why Choose Endowment plans?

Endowment insurance plans bring various benefits with them. In case of the death of a policyholder, this plan helps his or her family with financial aid in terms of the sum assured and bonuses. Also, this plan helps policyholders make a pool of savings for them and get it at the time of maturity of the policy which they can either reinvest or utilise it to enjoy life or meet financial goals like monthly expenses, child’s education, marriage, vacation, etc. Therefore, an endowment plan is a risk-free investment tool that provides you with a steady amount after a specific time provided the premium is paid on time.

Benefits of An Endowment Policy

Here are some benefits of an endowment life insurance plan:

• Maturity Benefit: This refers to a substantial amount that policyholders are entitled to get at the end of the policy term if the insured person survives till the endowment policy matures.
  
  
• Death Benefit: This benefit holds the amount of sum assured that your family will receive once they raise a claim for it, in the event of your demise. It works like a life insurance policy cover.
  
  
• Tax Benefits: Endowment insurance policies also give you tax benefits as the policy premiums paid by you can help you lessen your taxable income in accordance with the Income Tax laws.

The benefits of endowment plans turn highest with a maturity amount of 15 to 20 years policy period as you manage to accrue a good amount of money over that time. Such a level of maturity amount can be availed by you to meet your big expenses in the future. Also, some endowment plans give guaranteed returns and bonuses along with the sum assured. Such benefits with tax savings make this policy a widely praised and attractive investment tool. 

Who Should Buy An Endowment Insurance Policy?

Any person looking for a low-risk policy equipped with dual benefits of investment and insurance can definitely opt for an endowment plan. Also, if someone wishes to find a plan with a long-term investment perspective which can provide you with a lump sum amount at the end of the policy, they can also find this policy suitable for them. 

Endowment insurance plans come with a surrender value, which refers to the amount policyholders get on discontinuing the policy. They are eligible to get this amount only if they have paid the premium amount for at least two years of the policy. The policyholders can utilise this surrender money in case of a financial emergency. The surrender value is generally lower than the total amount of premium paid in the initial policy years, which means it is a partial compensation and not any benefit.

To Conclude

Endowment policy gives you a sense of security with insurance cover and financial soundness with survival and maturity benefits. Such an investment tool is hard to find and good to have. However, since your money is involved, you should get to know everything about this policy before buying. We hope the above-mentioned points will help you know about the basic features of the policy. 

Also Read

What Are Better Endowment Plans Or ULIPs?

Pros and Cons Of Purchasing Endowment Plans

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.