Top 5 Advantages Of Buying An Endowment Policy

Endowment plans are savings-oriented life insurance plans that guarantee benefits. These programs are available for a period of time ranging from ten to thirty years.

An Endowment plan is the greatest choice if you want to achieve a long-term financial goal. It will be divided into three sections: financial stability, protection, and achieving financial objectives. Although endowment programs may provide lesser returns, the investment risk is quite minimal.

Endowment plans usually have two clauses, namely,

With Profit – In 'Profit Endowment plans,' in addition to the sum assured, additional benefits are paid in the form of Terminal and Reversionary bonuses at maturity.

There are no additional advantages offered in 'Without Profit Endowment plans,' and the plan can be compared to a Traditional Endowment plan.

Top 5 Advantages Of Buying An Endowment Policy

Below are the top 5 advantages of buying an Endowment policy:

1. Death Benefits And Maturity Benefits

An endowment plan is a unique investment option since it guarantees you benefits as a maturity benefit if you live to the end of the policy's term. Furthermore, if you die within the policy's term, your nominee will get the sum assured, as well as other incentives, as a death benefit. Endowment plans, in this scenario, provide both death and maturity benefits.

2. Flexibility In Coverage

You can have flexible coverage with an endowment plan. You have the option of purchasing additional benefits such as rider benefits such as accidental death and disability, critical illness, and so on. The scope of your Endowment policy would become much more flexible if these riders were included in it. However, it would raise the policy's premium to some amount.

3. Payments For Premiums Can Be Made In A Number Of Ways

Endowment Plan providers typically provide flexible payment arrangements for premium payments. You have the option of paying your policy premiums at any time that is convenient for you. Monthly, quarterly, or even a one-time payment of the lump sum amount can be used as the premium payment frequency.

4. Bonus

The actual maturity benefit of an Endowment plan would be bigger than any other regular life insurance policy without the bonus because the feature of further bonuses is available. The benefits are greater since, in addition to the sum assured, a variety of alternative reimbursable sums are available.

5. Tax Benefits

Endowment insurance comes with tax advantages because the premium paid is deductible under Section 80C of the Income Tax Act of 1961. The maturity benefits gained through Endowment plans are likewise tax-deductible under section 10(10D) of the Income Tax Act of 1961 if the sum promised is at least 10 times the annualized premium.

Furthermore, even if Endowment policies provide high returns, bonuses, and other benefits, the returns are not adjusted for inflation. Because endowment plans are acquired for a lengthy period of time, there is a chance that the final return provided after the policy term will not be of real value owing to inflation.

Conclusion

Apart from these fundamental qualities, endowment policies also allow you to convert the insurance to a paid-up policy. You can also get a loan using your Endowment insurance as collateral. However, in order to receive these benefits, you must pay the policy premium for a minimum period of time and check with your assurer to see if your policy offers this option. As a result, you must first comprehend the key features of an Endowment policy, such as the breadth of coverage, benefits, and so on, before purchasing one to fulfill your specific financial objectives.

Also read - How Is Premium Of An Endowment Policy Calculated?

Understand The Working Of An Endowment With The Help Of An Illustration

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.