Why Should You Purchase An Endowment Policy?

Endowment plans can be used as both a life insurance policy and an investment vehicle. These plans pay out a lump amount in the case of the life assured's untimely death or when the plan reaches maturity. Endowment programmes can also help you grow your savings. Aside from the benefits of an endowment plan, there are a slew of other reasons to consider investing in one. Continue reading to find out why you should think about investing in an endowment plan.

What Are the Benefits of Investing in an Endowment Plan?

Some of the reasons why an endowment plan is a prudent investment are as follows:

1. Advantages on Two Fronts

Endowment plans are a form of life insurance with two functions. This type of plan includes both life insurance and long-term investment advantages. This implies that the person insured can benefit from the benefits of a life insurance policy while simultaneously building up a corpus to be utilised when the time comes.

2. Advantages of Earning Extra Money

An endowment plan may provide you with additional income. You can take advantage of a yearly incentive mentioned on your endowment plan. These annual incentives might be a percentage of the cash secured. This yearly bonus is added to the maturity benefit when the account reaches maturity. If the life guaranteed dies suddenly, the nominee receives both the yearly bonus and the death benefit.

3. Advantages of Taxation

An investment in an endowment plan is eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Furthermore, the proceeds are tax-free under Section 10(10D) of the Act.

4. Risk-Free Returns

Endowment programmes offer insufficient returns while appearing to be risk-free. Endowment programmes provide risk-free returns. Endowment plans guarantee returns over a certain time period if premiums are paid on a continuous basis, and these returns are risk-free.

5. Death and Maturity Benefits are Paid

A death benefit is provided by an endowment plan since it is a type of life insurance. The death benefit is paid to the nominee in the case of the life assured's untimely death. If the life assured survives the policy term, in addition to the death benefit, he or she is entitled to a maturity benefit at the conclusion of the policy period. The life guaranteed can get the maturity benefit as a lump sum payment.

6. Option to Increase Coverage

Endowment plans provide both life insurance and long-term investment options, but riders can be added to improve your life insurance coverage. Riders can be added to a standard life insurance policy to expand the amount of coverage available. Accidental death benefit, permanent disability benefit, whole and partial disability benefit, hospital cash benefit, premium waiver benefit, critical sickness benefit, and other life insurance riders are frequently offered.

Conclusion

An endowment plan is a kind of life insurance that also functions as a vehicle for investment. Aside from serving a dual role, an endowment plan may be quite useful to those who want to save for future financial requirements. Endowment plans may offer you with additional income to assist you in meeting your financial goals.

Also read - How Much Income Would You Require After Retirement?

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.