Common Features of Endowment Plans
Table of Contents
An endowment policy is a type of life insurance policy that provides you with a combination of both-an insurance cover and a savings plan. It helps you save regularly for a particular period of time, and makes you eligible to avail a lump sum amount when the policy gets matured, and if the policyholder survives the policy term. The lump-sum amount, known as sum assured, is given to the policyholder on a fixed date, as per the terms and conditions mentioned in the policy document. To know more about endowment plans, here are some common features of these plans that you must understand. Read them below:
1. Death Along With Survival Benefits
In case of misfortune event of death of the insured, the nominee or beneficiary of the policy will receive the sum assured along with bonuses. Also, the insured is eligible to receive the sum assured in case he/she outlives the policy term.
2. Higher Returns
An endowment policy helps you build a corpus for the future and provides financial protection to your family. An endowment policy offers greater survival as well as death benefits in terms of payout, as compared to a term life insurance policy.
3. Premium Payment Frequency
A policyholder can pay the required premium for the endowment policy that he/she has chosen. You can pay the premium via flexible premium payment modes on a monthly, quarterly, half-yearly, or yearly basis.
4. Option to Add Riders
Many endowment insurance policies come with riders. These are additional benefits that you can include to your policy by paying an extra premium at the time of policy purchase. For instance, there are riders for critical illnesses, total permanent disability, accidental death etc., which you can choose as per your requirements. These are not mandatory to buy, but help you avail greater coverage at affordable premiums.
5. Tax benefits
On the premium paid for endowment plans, you can avail tax benefits under Section 80C and Section 10(10D) as per Income Tax Act, 1961.
6. Low Risk
Traditional endowment policies are recommended as they are comparatively safer as compared to other investment options like mutual funds or ULIPs. This is because the amount is not directly invested in the stock market.
End Notes
Apart from the aforementioned features, there are several benefits that endowment plans commonly offer the insured. Some of these include insurance cover during the policy term, lump-sum payout in case of policy maturity, long term investment benefit, low-risk investment options, long term savings option, option to buy add-ons for enhanced coverage, additional bonuses, etc. These features and benefits make endowment plans a must-buy for an individual, as soon as he/she starts getting a steady income.
Also read: List of Latest Endowments Plans
What To Consider When Purchasing An Endowment Plan?
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.
