Endowment Policies: Types, Benefits and More
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An endowment policy is a life insurance policy type that provides a lump sum amount after a certain period or on death. Endowment policies are one of the popular life insurance policy types that come with the dual benefit of insurance as well as investment. Through their investment feature, endowment policies help the insured individual save a significant amount regularly over a period of time. One of the unique features of an endowment policy is that it provides a lump sum payment even if the insured survives the maturity period. What’s more is that the policyholder gets to enjoy tax benefits as well.
Types of Endowment Plans
When it comes to endowment policies, one gets a vast range of categories to choose from. Below mentioned is the list of types that endowment policies come in:
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Unit-Linked Endowment Plan
Under this endowment policy type, the premium paid gets divided into two parts. While one is dedicated towards insurance policy, the other is diverted towards investment in the funds as per the choice of the policyholder. -
Participating Endowment Plan
This endowment plan type provides a higher final payout by combining the sum assured with the bonus, if declared by the insurance company. In participating endowment plans, the basic sum assured as much as the death value is guaranteed to the life insured from the starting of the plan. -
Non-Participating Endowment Plans
Under non-participating endowment plans, the sum assured is paid in the form of death benefit to the beneficiaries or in the form of maturity benefits to the policyholder. The payout does not include any bonuses like that in the case of participating endowment plans.
Benefits of Endowment Plans
If you are planning to buy an endowment policy, go ahead with your decision. Why? It is because your endowment policy will grant you with many benefits like below mentioned:
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Survival Benefit
In the event of the unfortunate death of the policyholder, the beneficiary receives the assured sum. However, endowment plans also offer the survival benefit where the policyholder gets the assured sum upon the maturity of the policy. -
Low Risk Investment
Endowment plans are a low-risk investment. In comparison with other investment options, it can easily be found that endowment plans are a safer option when it comes to investing the policyholder’s money, as these life insurance plans guarantee a safe return of the money, even if the policyholder survives the maturity period. -
Long-term Saving Opportunities
If you want to invest your money safely in a safe option, there’s nothing better than an endowment policy since it allows long term savings, which could be easily accessible whenever the need arises. -
Bonuses
With your endowment plan, you can easily get additional bonuses. However, you may only be entitled for the bonuses if you have chosen the participating endowment policy and if the insurance company declares a bonus. If declared, the bonus would be added to the sum that you can avail at the time policy matures. The bonus could also be added to the death value provided to the nominee or beneficiary in case of the unexpected death of the policyholder.
Final Words
Are you ready to buy the best possible endowment policy for yourself? If so, make sure you go through the list of available riders that come with the plan. By adding a rider, you will be able to extend your insurance benefits and gain additional financial support if required. Next, it would be highly important that you choose the most suitable rider option in mind while keeping all the types available in mind. Lastly, make sure you look for the flexibility of premium payment. You must keep your income in mind and then choose the premium payment so that you pay for the policy as per your comfort.
Also read:
Types Of Endowment Plans In India
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.
