What Are The Significant Features Of The Endowment Plans?
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Endowment Plans are essentially life insurance policies which help in inculcating saving habits in a person. The policyholder is required to pay a premium amount in regular intervals which are accumulated in the savings scheme of the policy. This helps in building a corpus by the end of the policy tenure. This lump sum amount is delivered to the policyholder on the maturity of the Policy. In case of the demise of the policyholder, his/her nominees are entitled to take the sum assured along with the accumulated bonus(if any). The article further discusses the Features of the Endowment Plans.
Significant Features Of Endowment Plans
The following are the important features of the Endowment Plans:
1. Dual Purpose
Endowment Plans serve dual benefits of life insurance coverage and investment options. Endowment Plans enable you to secure a future for yourself and your family. With this plan you can build a corpus to fulfill your long term goals after the tenure of the policy.
2. Offers Death Benefit
This plan assures the life of the policyholder. In case of any unfortunate demise of the policyholder his/ her nominees would receive the entire sum assured from the insurance company. The lump sum may include accumulated bonuses, if any. This feature safeguards the financial position of your loved ones even after your life on earth.
3. Provides Maturity Benefit
If the policyholder successfully survives throughout the policy tenure, he is offered with the maturity benefit after the maturity of the policy. This lump sum includes the sum assured plus accumulated bonuses, if any. The policyholder can utilize this lump sum to fulfill his/her long term goals such as buying a vehicle, building a house, going for a longer vacation etc. This feature encourages the policyholder to develop a disciplined savings habit.
Also read - When should you consider purchasing endowment plan?
4. Tax Benefits
Under the Section 80C of the Income Tax Act,1961, the premium paid towards the life insurance policy is exempted from tax payment. The maturity amount is also exempted under Section 10(10D) of the Income Tax Act, 1961.
5. Mode of Payment
The policyholder is flexible to choose the mode of premium payment from yearly, half-yearly, quarterly and monthly.
6. Add-On Riders
Additional riders are available to the policy which extend the protection coverage with an extra premium amount. These riders include Critical-illness rider, Accidental Rider, Education Rider etc.
7. Loan Facility
After 3 complete payments of the premium, the endowment policy can be used to acquire loans by the policyholder. Therefore, loans can be taken against the Policy.
Conclusion
Endowment Plans offer life insurance coverage along with an investment option. This plan assures maturity benefit to the policyholder on his survival through the policy term and in the opposite case, it offers death benefit to his/her nominees. This plan also provides guaranteed addition as it is a Participating Plan. This plan also has tax benefits for the policyholder. The Endowment Plans are beneficial to the persons who expend a lot of money on unnecessary purchases and instead wish to save them.
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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.
