Know Why Should You Invest In Endowment Plans To Meet Your Financial Goals

How Endowment Plans Aid Financial Goals of an Investor?
Endnotes

Endowment insurance plans provide financial security for your family even if you are not present. Many people regard these plans to be one of life's most basic financial necessities, especially in today's world. Endowment policies come with a variety of features and perks, ranging from low rates to riders for extra coverage.

Endowment plans are a safe way to invest wherein the returns are promised up front. The sum assured along with the bonuses is released to the nominee of the policy in case of demise of the policyholder. Furthermore, you will receive the guaranteed maturity amount as well as any bonus that the insurer may offer each year at the time of maturity.

The advantages continue because the premiums paid on these plans are tax free.This allows the plan to be tailored to the investor's specific requirements.

How Endowment Plans Aid Financial Goals of an Investor?

Given below is how endowment plans are a great way to secure your financial freedom

Savings Corpus Built Overtime

The endowment insurance's savings component instils financial discipline in consumers. As a result, novice as well as expert investors should choose a savings plan that will result in a lump sum payment. Endowment plans encourage the accumulation of a specified savings corpus in order to provide the investor with a substantial sum of money in the long run, which can be used for a variety of purposes.

Insurance Coverage As A Security Net

Endowment plans provide a life insurance benefit in the event of the policyholder's premature death.The money assured, as well as any incentives, is returned to the beneficiaries/nominees ( if any offered by the company). Because endowment plans serve as a safety net, the policyholder's family is not put in a financial bind in times of need.

Additional Bonuses

Annual bonuses are often paid out as a percentage of the sum assured in endowment schemes. Additional bonuses accrued over the policy period are paid in addition to the sum promised in the event of the policyholder's survival. In the event of death within the policy term, the nominee receives the death benefit, which includes the whole sum assured as well as the total accumulated bonus.

High Liquidity

The ease with which an asset, or security, can be changed into immediate cash without impacting its market price is referred to as liquidity.

Endowment plans have a high liquidity rate, making them a convenient method to acquire cash when you need it. This function will help the policyholder meet immediate monetary needs, allowing them to achieve their financial goals.

Premium Flexibility

Most endowment policy alternatives let policyholders choose premium payment terms that are convenient for them. You can pay for your endowment plan premiums on a monthly, quarterly, half-yearly, or annual basis. You may be able to make a single premium payment at the commencement of the endowment plan, depending on the endowment guarantee policy.

Dual Tax Benefits

One of the most significant advantages of purchasing an endowment policy is the tax exemption provided under Sections 80C and 10 (10D) of the Income Tax Act.

As per section 80C of the Income Tax Act, an investment in an endowment plan is eligible for a tax deduction of up to Rupees 1.5 lakh. Furthermore, under section 10(10D) of the Income Tax Act, the profits earned through it are tax-free. This will aid in a hassle-free money transaction in the event of an emergency or when the cash is released upon the policy's maturity.

Endnotes

Endowment plans are a safe alternative to choose if you want to create a corpus while also weaving a safety net of insurance coverage. To improve your comprehension of the subject, it is recommended that you evaluate the aforementioned points before purchasing an endowment plan.