What Are The Different Types Of Endowment Policy?

An endowment plan combines savings, insurance coverage, and tax incentives for investors into a single product. It is not uncommon for plan templates to be customised for a specific investor. So that you may evaluate them and choose the best one for your needs, several endowment plans are discussed in this article.

What Are The Different Types Of Endowment Policy?

Following are the options available to the investor for buying an endowment plan

• Guaranteed Endowment Plan

An endowment policy's face value will be paid out at maturity or upon death of the policy's owner.

Beneficiaries under this scheme are provided to policyholders via insurance contracts. This will be paid at maturity along with the insured's guaranteed payment.

• Endowment Plan With Unit-Linked Investments

An endowment fund with unit-linked insurance adds value to a fixed-term savings plan by providing life insurance. This is a fantastic investment if you have a high risk tolerance and a desire for bigger profits.

The insurance portion of the premium is the bigger of the two. As a result, the market performance of a mutual fund determines the final return on investment.

• Endowment Plan At A Reduced Cost

This type of plan permits the policyholder to acquire assets that must be paid off after a specified length of time, generally a mortgage. Beneficiaries receive limited death benefits in case of insured's death.

• Unitized With Profit Endowment Plan

Due to their ability to balance volatility, unit-linked endowment plans reduce the risk associated with unit-linked insurance policies. A minimum amount of payments must be guaranteed as well. There are no risks associated with this investment because it is unaffected by market dangers.

• Non-profit Endowment Plan

In a non-profit endowment plan, unless otherwise stated, the stipulated lump sum payment is payable upon the insured's maturity or death. In the absence of a new incentive, the amounts stay unchanged. However, the insurance business tends to promise investors extra benefits that would help them earn a profit

Conclusion

Because of the various benefits that endowment plans offer, it may be difficult to differentiate the key features of the plan and to comprehend its functioning. You may use the information provided in this article to help you make an informed investment decision.

Also read

How A Saving Plan Like Endowment Helps You Meet Your Financial Objectives?

Term Insurance V/S Endowment Policy: Which is better?

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.