Why You Must Buy An Endowment Policy In 2021?
Table of Contents
An endowment policy is a type of life insurance that, in addition to ensuring the assured's life, allows the policyholder to save over time in order to receive a lump sum payment at the policy's maturity if he or she survives the policy term. This maturity amount can be used for a variety of financial goals, including paying for one's retirement, children's education and/or marriage, or the purchase of a home. The full sum assured is paid to the beneficiaries if the assured dies during the policy term; if the assured survives the term, the full sum assured is paid to the policyholder at the policy's maturity. Endowment plans, combine life insurance and savings into a single, easy-to-manage package. In India, they are a sort of traditional life insurance policy.
Profit-driven and non-profit endowment policies are the two types of endowment policies. Within these two classifications, there are several endowment plans designed to meet the needs of child education, whole-life protection, and pension, among other things.
Why You Must Buy An Endowment Policy In 2021?
Below are a few reasons why you must buy an Endowment Policy in 2021:
1. Characteristics Of An Endowment Plan
An endowment plan is a type of life insurance that allows consumers to make continuous investments over a certain period of time in exchange for lump-sum payment when the policy expires. The maturity benefit can then be used to satisfy a range of financial obligations, such as financing their children's education, saving for retirement, purchasing a property, or their children's marriage. In the event of an unforeseen catastrophe, not only does the plan pay a maturity benefit, but the policy's recipient also receives the entire sum assured amount.
2. Who Should Invest In Endowment Insurance?
An endowment policy, as previously said, could be an excellent savings option for those who have a history of splurging without a financial buffer. They may require a significant amount of cash at some point in their lives (especially after retirement), and an endowment plan could help them save in a disciplined manner. An endowment plan, which includes both life insurance and savings choices, is a good alternative for anyone aiming to achieve long-term financial goals.
3. When Is It Appropriate To Invest In An Endowment Plan?
Based on his or her financial circumstances, each individual requires a risk-free, guaranteed investment. As a result, endowment plans should be purchased to cover three areas: first, to protect and offer financial stability for loved ones, second, to reach a financial goal, and third, to build savings to meet long-term investment goals. If you wish to buy a regular premium plan, make sure you have a steady source of income to pay the payments on time. Endowment plans are favorable since they are lengthy assets with better returns over time.
4. What Are The Advantages Of Investing In An Endowment?
Among the most persuasive reasons to put money into an endowment plan is that it enables you to save money in a systematic way to meet your long-term financial goals. This plan also offers life insurance as well as the opportunity to start a savings account for a more secure financial future. Despite the lower returns, endowment plans have minimal investment risk. The policyholder may be eligible for tax benefits on the proceeds of an endowment insurance policy.
Conclusion
Endowment plans enable you to accumulate money for your future financial needs in a methodical manner. A bonus benefit is life risk insurance, which would be quite helpful to the family if the principal breadwinner were to pass away. Although the returns may be lower, they are virtually always risk-free in the case of a specific sum assured. Tax advantages are also possible in various forms, but only if you meet certain criteria. Individuals should purchase endowment plans for three reasons: one, to financially protect and provide for their loved ones; two, to save for a specific objective; and three, to build a corpus to meet an investment purpose over a long period of time.
Also read - Here's What You Need To Keep In Mind Before Buying Endowment Policy
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.
