Why is Your 20s Considered As The Best Time To Buy an Endowment Plan?

If you are a person who makes unnecessary purchases but wants to save your money instead of spending it unnecessarily, then this policy is your life jacket. Endowment Plans are essentially insurance cum savings plans. You are required to pay a certain amount of premium over a period of time in regular intervals. This encourages you to save money for your future needs and goals. The maturity benefit would be more than the sum assured as the accumulated bonuses(if any) would be added to the sum assured to benefit the policyholder with a lump sum. 

What is an Endowment Plan?

Endowment Plans are one of the most popular life insurance plans today. The Endowment Plans require the policyholder to pay a regular premium over a certain period of time. In case the life assured doesn't survive the policy period, his/her nominees are paid with the sum assured along with the bonus accrued (if any),by the life insurance company. In the best case, if he/she survives the Policy tenure, they are offered with maturity benefits which include the sum assured and additional bonus accrued,if any.

Why Is Your 20s The Best Time To Invest In The Endowment Plans?

If you are in your 20s and you wish to have great retirement goals and expensive desires, you must plan your finances thoughtfully in the right way. It is best advisable to start saving for your future as soon as you attain financial independence. Moreover, when you start a family and your family members are financially dependent on you, it is your responsibility to plan a secure future for them even in your absence. Let us see some major benefits of taking up the policy earlier in your 20s.

1. Premium Benefits

If you are in your 20s and buy a policy for 30 years, your premium would remain the same throughout the period of 30 years. However, if you decide to wait for 15 years to buy the same policy, your premium would be higher for the entire policy term. Buying an endowment plan or a ULIP early, strengthens your financial portfolio which is benefitted from the power of compounding. Moreover you can pay the premium on monthly, quarterly, half-yearly or yearly basis. So, you can get habituated with disciplined savings. Therefore the earlier you buy a plan, the cheaper the premium.

2. Health Deteriorates With Age

As a matter of fact as you grow older, chances of ailments rise. With growing old age, your health deteriorates and at the same time the premium increases. Therefore the longer you wait to buy a policy, the higher it's going to cost you. Also, you might not be eligible to buy an insurance policy, if your health doesn't match the terms of the insurance company. 

3. Tax Benefits 

The premium paid towards the Endowment Plan has tax exemptions under Section 80C of the Income Tax Act,1961. The maturity benefit also enjoys tax benefits under Section 10(10D) of the same act. Therefore you can save your income from taxation from a very young age. 

Wrapping It Up

Endowment Plans are the best option for those people who want to play safe. The earlier you buy the policy, the lower the premium. Also, it inculcated forced savings from a very young age. This helps in creating wealth to fulfill your long term goals by the commencement of your retirement. The premium gets benefited by compounding interest. Therefore, these are good plans to opt for in your early 20s.

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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.