Key Benefits of an Endowment Plan

An endowment plan is a life insurance policy that serves dual objectives i.e. it helps you in creating  a risk free corpus, and also provides financial safety to the family in the event of an unforeseen incident. This plan is ideal for individuals, who are looking for life insurance protection, tax benefit and maturity benefit under a single package.

Benefits of an Endowment Plan

The benefits offered under an endowment plan are as follows:

1. Maturity Benefit

As long as you are paying your premiums on time and have kept your endowment plan active, the maturity benefit remains intact. It is a guaranteed maturity benefit amount that would help you in meeting your financial goals. This maturity benefit is dependent upon the plan term , plan premium, age, term of premium payment and gender. A policyholder would receive some guaranteed additions on maturity in certain plans.

2. Life Insurance Benefit

One of the most important benefits offered under an endowment plan is that your family members are always taken care of under this plan i.e. even when you are not around. The benefit offered here involves a lump sum payout, ensuring that even in your absence your family members are able to continue with the life that you have planned for them. This amount is fixed and is given to the predetermined nominee. Also, remember that there are certain insurance plans that offer guaranteed additions and reversionary bonus, which are considered while calculating the death benefit.

Also read - Eligibility Criteria For Purchasing A Endowment Plan

3. Loan Benefit

With the help of an endowment plan you can avail a loan for yourself. Once the plan acquires a surrender value, you can apply for a plan loan.  The interest that is charged upon these loans is very competitive.

4. Tax Benefit

An endowment plan also provides the policyholder with tax benefits. The premiums paid by you can help you in reducing your taxable income as per section 80 C of the Income Tax Act. There are several tax benefits available on maturity of the endowment plan. It helps you in saving taxes during the inception of the plan and at accumulation and maturity stage.

5. Rider Benefit

There are various riders available to the policyholder that they can include according to their requirements:

• Family Income Benefit
• Hospital Cash Benefit
• Accidental Death Benefit
• Critical Illness Benefit
• Waiver of Premium Benefit
• Accidental Permanent Total/Partial Disability Benefit

At the End

An endowment plan offers several benefits to the policyholder. These plans are best suited for meeting several financial requirements of an individual such as funding for their child’s education and their marriage. Moreover, an endowment plan can also be used for building a retirement corpus or purchasing a house.

You may also like to read - What Are The Most Suitable Riders For An Endowment Policy?

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.