Why Should You Buy an Endowment Plan?

Endowment plans can be utilised as both a life insurance policy and an investment vehicle. In the event of the life assured's untimely death or when the plan achieves maturity, these policies pay out a lump sum. Endowment plans can also help you increase your money. Aside from the advantages of an endowment plan, there are numerous more reasons to consider investing in one. Continue reading to learn why you should consider investing in an endowment plan.

Why Should You Consider Investing in an Endowment Plan?

The following are some of the salient features of an Endowment Plan that explain the reason why an endowment plan is a wise investment:

1. Dual Benefit

Endowment plans are a type of life insurance that serves two purposes. This sort of plan provides life insurance as well as long-term investment benefits. This means that the life guaranteed can get the advantages of a life insurance policy while also accumulating a corpus to be used when the time comes.

2. Benefits of Earning Extra Money

An endowment plan might give you extra income. You can take advantage of an annual incentive that has been announced on your endowment plan. These annual incentives might be a certain proportion of the cash secured. When the account achieves maturity, this annual bonus is added to the maturity benefit. If the life assured dies unexpectedly, the nominee will get both the annual bonus and the death benefit.

3. The Benefits of Taxation

Under Section 80C of the Income Tax Act, an investment in an endowment plan is eligible for a tax deduction of up to Rs. 1.5 lakh. Furthermore, under Section 10(10D) of the Act, the proceeds are exempt from taxes.

4. Returns with No Risk

Endowment programmes provide insufficient returns while being perceived as risk-free. The returns on endowment plans are risk-free. Endowment plans guarantee returns over a set length of time if premiums are paid consistently, and these returns are risk-free.

5. Maturity and Death Benefits are Paid

Because an endowment plan is a sort of life insurance, it provides a death benefit. In the event of the life assured's untimely death, the death benefit is paid to the nominee. In addition to the death benefit, the life guaranteed is entitled to a maturity benefit at the end of the policy term if he or she survives the policy term. The maturity benefit can be received as a lump sum payment by the life assured.

6. Option to Expand Coverage

Endowment plans provide life insurance as well as long-term investment alternatives, but riders can be added to increase your life insurance coverage. Riders can be added to a conventional life insurance policy to increase the amount of coverage offered. Accidental death benefits, accidental permanent disability benefits, complete and partial disability benefits, hospital cash benefits, premium waiver benefits, critical illness benefits, and other life insurance riders are often available.

Who Should Consider Buying an Endowment Policy?

An endowment plan is a type of life insurance that also serves as an investment vehicle. An endowment plan may be quite beneficial to people wishing to build a corpus for future financial needs. Endowment plans may provide you with additional income to help you reach your financial objectives. 

Conclusion

The above-mentioned points in this article explain the reasons and tell the individual about the checklist one should keep in mind while buying an Endowment Policy. Before investing in a particular endowment policy, one should go through all the details and should then only plan to purchase one.

Also Read: Learn Why Endowment Policies Are Unique From Other Life Insurance Policies

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive and should research further or consult an expert in this regard.