What Are The Different Types of Endowment Insurance Plans?

Endowment plans provide investors with a combination of savings and insurance coverage, as well as tax benefits. These plans are available in a variety of formats and are specially designed to meet the demands of a given investor. We've gathered a list of the various types of endowment plans in this post to assist you differentiate between them and choose the best one for you.

Types Of Endowment Plans

Given below are the types of endowment insurance plans you could invest: 

• Unit Linked Endowment Plan

A Unit Linked Endowment plan is a fixed-term savings plan with the added advantage of life insurance. This is suitable for those with a high risk tolerance and those seeking larger investment returns. 

Under this plan, the premium paid is split into two streams, one for insurance and the other for investing in funds of your choice. As a result, the eventual return on investment is determined by the fund's market performance. 

• Guaranteed Endowment Plan

On the date of maturity, in these plans, the face value of an endowment policy will be paid to the policyholder or to the beneficiary of the policy in case of demise of the policyholder.

The policyholder receives assured benefits under this plan. On maturity, the policyholder will receive the guaranteed sum assured, as well as Guaranteed Yearly Additions and Guaranteed Loyalty Additions.

• Unitized with Profit Endowment Plan

These are mixed unit-linked endowment plans that mitigate the risk of unit-linked policies by balancing volatility. A minimum level of repayment must be guaranteed, and unit valuations must be produced on a yearly basis. This fixed sum is unaffected by market risks, making it a safe investment alternative for the investor.

• Low-cost Endowment Plan

This sort of endowment plan was created with the goal of allowing the policyholder to accrue assets that must be paid after a set length of time, generally a mortgage. In the event of the insured's death, the beneficiary will get the minimal sum assured.

• Non-profit Endowment Plan

Under Non- profit endowment plans, the stated lump sum is due when the insurance matures or the insured individual dies, whichever comes first, in the event of a non-profit endowment plan. There is no additional incentive for the amount, therefore the number remains constant. However, to overcome that and make the option more viable for investors insurers frequently promise extra benefits that will assist you in generating returns.

Endnotes

Given the numerous benefits provided by endowment plans, it might be difficult to separate the important elements of the plan you wish to invest in and comprehend its functioning. Therefore, the above article will set apart the salient features of the different types of endowment plans available in the market and help you arrive at an informed investment decision.

Also read 

Steps To Buy Endowment Insurance Plans Online

Tax Benefits In Endowment Insurance Plans

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.