Top 5 Tips Worth Considering When Buying an Endowment Plan
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With an influx of investors looking to park their money for future needs, it becomes increasingly important to be well aware of the benefits, features, risks and rewards associated with the policy before opting for it. Hence, doing a great deal of research before investing becomes critical.
As a part of this article insight regarding key factors and tips to consider while opting for an endowment plan will be showcased.
First Off, What are Endowment Plans?
Endowment plans are policies that provide the policyholder with a life cover. That is, in the event of the death of the policyholder, the beneficiaries get a lump sum based on the premiums paid. Conversely, in case the policyholder lives longer than the policy tenure, the lumpsum is made available to the policyholder.
Additionally, there are bonuses and tax savings associated with endowment policies, that make it a worthy financial product for many.
Are There any Tips or Considerations When Buying One?
Since it becomes increasingly important to know about specifics, we have compiled a list of top 5 points worth considering when looking to buy an endowment policy
1. Invest Early
Given that investment in financial policy requires investors to have a long-term investment horizon, it becomes critical for investors to invest from an early stage. This allows them to enjoy a large corpus during the end of their tenure. Additionally, it facilitates an investing mindset.
2. Know About Types of Endowment Plans
Before investing in an endowment plan, thorough research on the variables as well as the available types of endowment plans will better aid decision-making among potential investors. For example, endowment plans may be of a profit or a non-profit type. Wherein, profit-based plans allow investors to participate in profit sharing of the company.
3. Endowment with Riders
Riders allow for policyholders to cover specific events such as permanent illness, education endowment, and so on. Theryer by providing policyholders with additional benefits over and above the base policy. These riders do come at a slight premium above the basic plans.
4. Choose the option best suited to your needs
Endowment plans may be adopted for salaried incomes with regular incomes or folks with irregular incomes. That is, endowment plans allow for recurring payments to be made or a lump sum based on the policyholder’s preference. This by allowing them to choose a plan that best suits their needs.
5. Know your Risk Appetite
While evaluating features of the policy such as riders, frequency of premium payment, amount of premium payment, tenure, and so on, it becomes critical to be well aware of factors that dictate future cashflows, hence allowing for policyholders to enjoy the full benefit of the policy.
All in all, the need to do research when it comes to investing your hard-earned money cannot be undermined. Hence, as an investor looking to opt for an endowment policy, one may use this article as a road map to key points that would be needed to be considered among other things.
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