Endowment Life Insurance Policy - Here’s All You Need To Know About The Rate Of Return
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Endowment plans are life insurance policies that guarantee an assured sum to the policyholder with many other benefits upon maturity of the policy. The death benefit is also offered to the beneficiary of the policy in case of the policyholder’s untimely death.
Benefits Payable Under an Endowment Life Insurance Policy
When these life insurance policies mature, the policyholder will get a guaranteed sum along with numerous other privileges. Simply put, the policy functions like an investment vehicle that also gives insurance benefits. The policy's two main advantages are-
- Death Benefits- In the event that the policyholder dies, the insurance company pays the guaranteed sum to the nominees of the policy.
- Maturity Benefits-Upon surviving the insurance period, the policyholder is guaranteed to collect the maturity sum from the insurer.
How Does An Endowment Policy Work?
The endowment policies are of two types-
- Profit- In addition to the guaranteed amount, this also provides terminal bonuses to the nominees at maturity.
- Non-profit- This coverage is similar to a standard life insurance policy and offers no such benefits.
Another feature of these policies is lump-sum pay-outs of the guaranteed amount at the end of the policy term with an option to reinvest the same for financial goals.
Who Needs To Purchase Endowment Policies?
People who are committed to long-term financial planning, have a desire for a lump payment, and have a steady source of income may want to think about purchasing endowment life insurance plans. The best endowment plans to invest in are life insurance policies if you have trouble saving and tend to spend carelessly. The policy is a methodical investing technique, allowing you to save money for later usage. You should choose a term plan if your insurance quotient is more important to you than saving money.
Why Should You Purchase Endowment Policies?
Purchasing an insurance policy with assured returns is always the best option. However, these policies are the best endowment plans if you want to safeguard your family and loved ones from financial hardship after your passing or if you need to create a corpus to successfully achieve long-term objectives. The best life insurance policies for financial goals and goal-based saving are endowment policies.
Things To Consider Before Buying Any Endowment Policies
Here are some things that you always need to keep in mind whenever buying any endowment life insurance policy-
- Flexibility- Whenever you purchase any endowment plans, keep the insurer's flexibility in mind.
- Rider Benefits- Determine whether the insurer offers any additional benefits, such as a marriage or education policy. These advantages differ from insurer to insurer, and you can select anyone based on your needs. However, you would also be required to pay a higher premium than with a basic endowment insurance plan.
- Guaranteed and Non-Guaranteed Returns- The best endowment plans are those that offer guaranteed and non-guaranteed returns since they are low-risk and provide financial security. Guaranteed returns from the policy are fixed returns that are paid upon maturity or demise.
- Bonuses- Every time an investment company makes money from its assets and obligations, it declares bonuses, which it then gives to its clients at the end of the fiscal year.
Conclusion
Understanding the various advantages of the endowment offers you a better comprehension of your needs and hence saves money for your future financial needs too. You should wisely make choices while choosing the endowment policy while understanding its terms and conditions.
Also read: Is Endowment Insurance Preferable To Term Insurance?
