Essential Documents That You Must Have For Buying Endowment Plan
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Endowment plans are best suited for individuals who desire stability and financial protection for their future savings. These policies provide a disciplined savings plan along with a life cover for a specific period that protects the future projected savings for the family in the event of the untimely demise of the insured. So, if you are thinking of buying an endowment policy, here are some of the important things that you should know-
Features of Endowment Policy
- Serves with a dual purpose: An endowment policy serves you with a dual purpose as it not only works as an insurance policy but also offers you with long term investment benefits.
- Higher returns: An endowment policy helps you to build a corpus over a period. This results in a higher payout when your policy matures.
- Low-risk investment: Unlike other types of investments such as ULIPs or mutual funds, endowment policies are comparatively safer because here your money is not directly invested in the stock market or equity.
- Frequency of premium payment: Under such plans, policyholders can make regular, limited, or single payments of premiums depending on the policy chosen. You can also choose to make payments in frequencies of monthly, quarterly, half-yearly, or yearly.
- Flexibility in coverage: You can add riders such as accidental death and total disability or critical illness, to the policy and enhance your policy coverage. To get this benefit, you need to pay an extra premium to your insurer.
- Tax benefits: Policyholders will get tax concessions on both premium payments (under Section 80C) and the final death or maturity pay-outs (under Section 10(10D)) of the Income Tax Act.
Factors To Consider Before Buying An Endowment Policy
You need to consider the following factors before choosing an endowment plan:
- Endowment policies are long-term commitments, so make sure you must have a steady source of income to buy such plans. Otherwise, your policy will lapse, and you will not be able to take the benefits out of it.
- You should have a disciplined approach towards paying your policy premium payments.
- Make sure that you choose such a plan that gives you maximum returns that will cover your future needs. It will be ideal if you choose a policy with a sum assured of at least 10 times your current annual income.
Eligibility Criteria For An Endowment Policy
Each endowment policy offered by different insurers has different eligibility criteria. The general eligibility criteria for buying such policies is more or less the same:
- The minimum and maximum age at the time of buying the policy could range from 0 years to 60 years.
- The minimum and maximum age at the time of maturity of the policy could range from 18 years to 100 years.
- The policyholder must have the ability to pay the premium for the chosen policy.
- Many insurers might also ask you to declare your existing illnesses before issuing you the policy.
Documents Required For Endowment Policies
- Proof of Identity: Passport, PAN Card, Driving License, Aadhaar, Card, MNREGA Job Card, Company ID card, etc.
- Proof of Residence/Address: Rent agreement, Latest utility bills, Property Tax or Municipal Tax receipt, Bank account/Post Office Savings Account statement or passbook.
- Proof of Age: Birth Certificate/Passport/Driving License/Voter's ID Card/High School Certificate
- Income Proof: Latest payslips/ Certificate of employment/ Income Tax Return File
Conclusion
Endowment Plans offer Guaranteed Additions and Bonuses in addition to the Sum Assured which get added to the policy holder's account every year. These benefits along with the Tax Savings make this life insurance policy a very attractive investment tool.
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