Types Of Endowment Policies Available In India

In addition, endowment policies give life insurance for a specific period of time. In exchange for low premiums, an endowment plan provides financial security for your family against life's uncertainties. Furthermore, the returns can help you achieve long-term financial goals including buying your dream home, paying for your child's education, saving for retirement, and more. If you're short on cash, you can also take out a loan against your insurance. With this plan, you can deduct up to 1.5 lakh in premiums paid under Section 80C of the Income Tax Act of 1961. Furthermore, the maturity amount is tax-free under Section 10(10D) if certain conditions are met.

Types of Endowment Policy

The following are the several sorts of endowment plans:

1. Full-Endowments

These plans, also known as with-profit endowment plans, guarantee you a specific amount at the end of the policy period, which is referred to as the sum assured. If an unfortunate occurrence occurs within this time, the insurance will pay this amount to your nominee. The maturity benefit you receive after the policy matures is typically larger than the sum insured since the insurer pays you additional money in the form of incentives.
As a result, full-endowments can help you accumulate a significant amount of money over time.

2. Endowment with a Low-Cost

This plan's premium is reduced, allowing you to save for future payments that are due after a certain period of time. In the event of an emergency, the insurance will guarantee the sum received by your nominee. Yearly bonuses also increase the amount you'll receive when you retire. The primary purpose is to establish a fund within a particular time frame. Thus, this type of endowment can be utilised to cover loan repayments or specific life goals.

3. Unitised With-Profit Endowment Plan 

These plans combine the high earning potential of ULIPs with the security of guaranteed returns to protect your money from market fluctuations.

The scope of profit from these activities is determined by the capital market. These plans, on the other hand, reduce the impact of market downturns by guaranteeing a payout at maturity. Regardless of market volatility, you will receive this guaranteed refund. While you are away, your candidate receives this amount. As a result, this product can be thought of as a low-risk investment with a high potential return.

4. Endowment for a Non-Profit Organization

If a catastrophic catastrophe occurs, this policy gives you a lump sum payment at maturity or to your nominee, whichever comes first. The payout amount remains constant because the insurer does not offer bonuses with these policies. As a result, these plans are excellent for providing financial security to your family while you are abroad.

5. Unit- Linked Endowment Plan

This is for those who are willing to take a lot of chances in order to obtain the best value for their money. In this fixed-term plan, the premium is utilised to purchase investment fund units. The fund's ultimate return on investment is determined by market performance. It also includes life insurance for the individual who is covered.

Conclusion

Endowment plans are an excellent choice if you want the best of all worlds: investment, insurance, and tax benefits. When considering purchasing one, keep the benefit of guaranteed returns in mind. The amount you invest is safe since the guaranteed sum is secured at maturity. As a result of the regular incentives, your fortune will grow. Having a consistent source of income until you're 99 years old also provides financial security after you've retired. Because of all of this, as well as the financial security offered by a life insurance policy, this coverage is an all-arounder. It allows you to meet all of your financial goals at the same time. So begin saving for your family's future protection and security right now.

Also Read: How Can Endowment Insurance Help In The Growth Of Your Savings?

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.