Why Should You Get An Endowment Plan?
An endowment plan works just like life insurance but is a combination of insurance and investment. It offers dual advantages. Once the plan matures, the policyholder receives the sum assured. In the event of the policyholder's death, the person's family gets a lump sum payout as a death benefit.
The plan pays the amount either on the policyholder's demise or after a certain period, as the terms may be. Thus, it allows the policyholder to enjoy a living benefit in the form of regular payouts while also receiving insurance coverage. Here is all about why you should get this plan.
What are Endowment Plans?
What is an endowment plan? It is a kind of insurance plan that offers a life cover and an avenue to save periodically over a particular term so that one can get a lump sum payout when the policy matures.
Subsequently, this maturity benefit can be used to meet different financial goals like funding kids' higher education and marriage, buying a home, planning for retirement and so on.
The policy not only offers a maturity benefit but also the entire sum assured. The latter is paid to the beneficiary in the event of the policyholder's demise.
Reasons to Get An Endowment Plan
An endowment plan pays the sum assured to the beneficiary if the policyholder meets an eventuality. For that, any outstanding premiums are deducted from the accumulated amount.Ā
An endowment policy also pays a lump sum amount if the policyholder survives the plan term. The amount is adjusted after considering premium defaults and company performance. The plan offers guaranteed returns at the time of maturity. This is known as the guaranteed maturity benefit. Therefore, the policy is one of the best savings plan in India. The returns are on a compounding basis during the plan tenure.Ā
A policyholder must keep aside a predetermined amount to pay the premiums over a chosen term. This helps one to exercise a disciplined approach to savings.Ā
The main benefit of these plans is that they have tax benefits on the annual premium and death benefit under Sections 80C and 10D, Income Tax Act
Endowment plans are liquid in nature.
Insurance providers often offer extra benefits to policyholders. These can be double, marriage or education endowment policies. The policyholder can also opt for additional riders for critical illnesses, major surgical care and more, by paying a marginal premium in addition to the regular premium payments.
One can apply for this savings plan online. But who should go for this policy? One who tends to spend highly without any monetary backup can consider buying this plan. The person may need a considerable amount in hand, after a specific period in life (particularly, after retirement) and the individual can build the habit of saving regularly. On the other hand, a person who wants to meet long-term financial goals, can choose this plan. Keep in mind your financial requirements when you consider getting an endowment plan.
