Things To Know About An Endowment Policy

There is a widespread misperception in the market today that a term plan is pointless because there is no ‘benefit' in the form of a lump sum payment if you survive the term.

A term plan is constructed in this manner. You live - no payout or you don't live - but your family is safe. There are no savings, only protection. Because of the apparent "drawback" of the term plan, which is that it does not provide anything to the policyholder if he or she survives the period of the policy, insurance firms developed the Endowment policy and its sub-set, the Money Back Policy.

An endowment policy combines the benefits of both a protection and a savings plan. These plans cover the risk for a set length of time. The premiums for these policies are substantially greater than the premiums for term plans.

Terms And Conditions Of An Endowment Policy

Below are a few terms and conditions of an Endowment policy:

• Death along with Survival benefits

In the event that the insured passes away before the policy's maturity date, the nominee/beneficiary receives the sum promised as well as incentives. Furthermore, if the assured outlives the insurance, he or she is entitled to the sum assured.

• Returns

An endowment plan not only provides financial security to the policyholder's family and dependents in the case of the claimant's untimely death but also assists the policyholder in building a future corpus. Whether it's for the survival benefit or the death benefit, an endowment plan's payment might be significantly higher than a typical life insurance policy's.

• Payment Frequency

Depending on the insurance selected, the policyholder can make regular, single, or limited premium payments. Paying in yearly, half-yearly, quarterly, or monthly intervals is also an option.

• Bonuses

Insurance firms award bonuses based on the firm's success. At the end of each policy year, an insurance provider who generates a profit from his or her investments distributes a portion of the profit.

• Non-Guaranteed and Guaranteed Returns

Many endowment plans offer a mix of non-guaranteed and guaranteed returns, in addition to low-risk insurance products with dual benefits of savings and death protection.

• Claim Process of Endowment Plan

The beneficiary shall notify the assured of the policyholder's death as soon as possible. A claim form is sent to the nominee as soon as the assurer receives the notification of the loss. To receive the death benefit, the beneficiary/ nominee of the policyholder/ assignee or legal heirs must sign the claim form. The last treating doctor who examined the assured should furnish the loss statement. 

The authorities of the hospital where the assured is being treated shall produce the certificate. A witness statement and death certificate from someone who was present at the time of cremation must be provided. If a discharge voucher is required by the insurance company, it should be delivered once the voucher has been filled out.

Conclusion

An endowment policy provides financial security to your family in the case of your death. If the policyholder lives to the end of the plan's term, a specified sum is paid to them at maturity. The premiums are often small, recurrent amounts spread out over time.

Endowment policies are a good option for those who do not want to invest in pure life insurance because they operate as a savings vehicle. It can be used as a retirement fund or a savings account for other long-term goals. Term life insurance policies, also known as pure life insurance policies, do not allow the policyholder to withdraw the amount paid to the assurer if they survive the assured period, unlike endowment policies.

Also read: Purchasing An Endowment Plan Online Or Offline?

How An Endowment Plan Works - Explained!

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.