Key Features Of An Endowment Policy
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Endowment life insurance is a type of life insurance policy that allows the owner to leave a gift to the person or institution of their choice. The endowment life insurance policy was introduced in India in 1950. It was meant for people with low incomes and they could afford this type of insurance only if they had an endowment account with a bank. In 2006, this kind of insurance became available for all citizens and not just those who had an endowment account with a bank.
Key Features of Endowment Life Insurance Policies
Low-risk investment: An endowment policy is your low-risk investment avenue. In comparison to Mutual Funds and ULIPs, your life insurance endowment policy has lower risk because your money doesn't directly go into equity funds or the stock market.
Flexible premium payments: Under endowment policy, you can choose to pay your premiums monthly, quarterly, half-yearly, or yearly. You can select the frequency of the premium payments depending on your feasibility.
Flexibility in cover: You can enhance the base plan to get additional insurance against critical illnesses, disability, and accidental death. This additional bonus coverage is called riders. You will have to pay some extra amount over and above your base premium to add riders to your base plan.
Maturity: The policyholder gets a maturity benefit upon the end of the term. The policyholder receives a sum assured and bonus for the duration of the plan. The sum assured from the maturity benefit is exempted from tax up to a limit.
Tax benefits: The policyholder is entitled to get tax exemption on premium payments, maturity, and final pay-outs under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
Death along with Survival benefits: In case of demise of the insured, the beneficiary/nominee of the policy gets the sum assured along with bonuses. Also, the insured is allowed to get the sum assured if he/she outlives the policy.
Higher returns: An endowment policy helps build a corpus for the future and provides financial protection to your family. The payout for survival benefit and death benefit of an endowment plan is higher than that of a pure life insurance policy i.e. Term Plans.
Guaranteed savings no matter what: An endowment policy gives fixed returns. So, your financial goals and family's future are always in safe hands
Conclusion
The general procedure to cancel an Endowment policy requires individuals to visit their insurance provider along with the necessary documents like the original policy document, ID proof, Surrender / Cancellation Form, and a canceled cheque for fund transfer. While the cancellation procedure may differ with each insurer, hence it is wiser to contact your insurer to get to know the procedure.
Also read: Endowment Policy - Saving Plans, Features & Benefits
