Categories Of Endowment Plan Explained

An endowment plan combines savings and insurance coverage with tax incentives for investors. Plan formats vary, and they are tailored to match the needs of a certain investor. These endowment plans are described in this post so that you can compare them and select one that's right for your needs.

Categories Of Endowment Plan Available

Following are the types of endowment insurance plans available to you:

• Endowment Plan With Unit-Linked Investments

Life insurance is an added benefit to a unit-linked endowment fund, which is a fixed-term savings plan. A high-risk tolerance and a desire for higher investment returns make this a good investment.

Under this plan, the premium paid is split into two streams, one for insurance and the other for investing in funds of your choice, with the insurance stream being the larger of the two. So the final return on investment is determined by the market performance of a mutual fund.

• Unitized With Profit Endowment Plan

By balancing volatility, these unit-linked endowment plans limit the risk of unit-linked policies. As well, a minimum level of repayment must be assured. It is a safe investment alternative because it is unaffected by market hazards.

• Low-Cost Endowment Plan

Such an endowment plan allows the policyholder to accumulate assets that must be paid off after a certain period of time, usually a mortgage. The beneficiary will get the minimum sum assured in the event of the insured's death.

• Non-Profit Endowment Plan

Unless otherwise specified, the indicated lump payment is due upon maturity or death of the insured under a non-profit endowment plan. Amounts remain constant because there is no additional incentive. The insurance industry, on the other hand, typically promises investors additional benefits that will help them generate returns.

• Guaranteed Endowment Plan

According to these plans, an endowment policy's face value will be paid to its owner upon maturity or to its beneficiary if its owner dies.

Under this plan, the policyholder receives benefits in the form of an insurance contract. An insured's guaranteed sum promised will be paid at maturity along with Guaranteed Yearly Additions and Loyalty Enhancements.

Endnotes

It may be tough to distinguish the main aspects of the endowment plan you intend to invest in and understand its operation because of the many benefits it offers. To assist you to make an informed investment decision, the article above will help you to distinguish between the numerous types of endowment plans on the market.

Also Read:

Exploring The Returns of An Endowment Policy

What Riders Should Be Added Under 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.