What Is An Endowment Policy And Should I Get One?

Endowment plans offer a bundle of benefits, including life insurance cover, with an added opportunity of building a saving corpus. Such plans also have maturity benefits that can be activated if the policyholder survives the maturity period. Endowment plans ensure zero risk returns and are popular among investors with a lack of risk appetite. 

In case of an untimely demise of the policyholder, the sum assured is released to the nominated beneficiary. Here we have compiled the key features that can be availed by investing in an endowment plan, which will help you understand if it is an appropriate option for you.

Should You Buy An Endowment Plan?

Following are the benefits offered by an Endowment plan:

• Maturity Benefits

The maturity benefits offered under an endowment plan state that the policyholder shall receive the lump sum payment even if the policyholder survives the maturity term. This feature of an endowment plan carves it out from the other plans and ensures security to the policyholder.

Must Check:- Life Insurance Benefits 

• Flexible Premium Payment Options

The premium payment can be selected on the basis of your comfort. Payments can be paid monthly or can be stretched over a period of time. This feature adds flexibility to the plan. In cases of irregular income, this can be useful to the investors.

You may also like to read:- Does It Make Sense To Surrender An Endowment Policy?

• Low Risk Involvement

The functioning of Endowment plans stays aloof from the market conditions and hence does not deal with risk. It can fit your criteria if you want to maintain absolute security when it comes to the money you have invested.

This feature will help ensure guaranteed returns risk-free and hence can be considered according to your risk appetite.

Must Check:- Life Insurance Company

• Life Cover

With the maturity benefit, endowment plans also extend life insurance cover, which releases the sum assured to the nominated beneficiaries in case of an unfortunate event with the policyholder.

If you have financially dependent family members, it will help ensure security during the time and will ensure a smooth financial transition even in your absence.

• Tax Benefits

Under Section 80C of the Income Tax Act, you can claim deductions up to Rs. 1.5 Lakh for premiums paid in a financial year. This will ensure a smooth transaction of money without any hassle in the time of an emergency or when the sum is released upon the maturity of the policy.

Also Read:- What Happens When An Endowment Policy Matures? 

Conclusion

While the reasons to invest in an endowment plan might differ, the features mentioned above can help carve out the difference among different plans available in the market. Along with financial security, an endowment plan also offers compounded benefits and encourages savings that can be retrieved in the future. It has proved to be a suitable choice among investors.

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.