Essentially you must know what is endowment plan. It acts like a life insurance policy and a savings program for its policyholders. Risk-free, this policy ensures that its policyholders receive an accumulated sum at a specific period of maturity or on passing away.
It is a plan that provides life coverage to the insured. And the lump sum received on maturity can be utilized for multiple financial needs, such as a child’s education, marriage, or retirement. Also known as a guaranteed income plan, other benefits to the policyholder include:
- Tax-exempt maturity amount.
- Long-term regulated savings.
- Lump-sum payouts.
- Additional bonuses.
- Low-risk investments.
What Is Endowment Plan And Its Types?
Providing benefits in case of passing away or policy maturity, these plans are generally thought to be the best tools for the safe accumulation of funds over time. Various types of endowment plans can be opted for depending on the investor’s needs.
Full endowment plan
These plans offer the insurer the sum assured when buying the policy. The final payout, on the other hand, in case of maturity or demise of the policyholder, is much higher due to the bonuses provided.
Non-profit endowment plan
In this type of policy, the sum assured to the policyholder is the same as at the time of buying the policy, and a lump sum is paid out on maturity or in case of passing away to its beneficiary. The insurer provides no bonus.
Low-cost endowment plan
Made ideally for future savings of the policyholder, these plans are designed in such a way as to pay for mortgages and loans generally. On the demise of the insured, the nominee receives the sum assured.
Unit-linked endowment plan
Under these plans, the premium paid by the insured is split into two parts: one is used for the life insurance cover, and the other is invested in market schemes.
These, in general, are higher-risk plans.
When Should One Opt For An Endowment Plan?
An endowment plan helps one systematically save over some time. Hence one of the essential things before opting for such policies is ensuring a regular source of income to pay for premiums of the same every month.
One should be opting for these plans when one is looking to
- Accumulate a lump sum fund in the future
- To protect your near and dear ones in case of any mishap to you.
- When you want to save for the future needs of your children, such as education and marriage,
- Save and add to your retirement corpus
- Safeguard your investments with tax-saving benefits.
Conclusion
To ensure your family’s safety, look no further than an endowment plan if you are looking for insurance, savings, and tax benefits all under one plan. These plans guarantee low-risk assured safety to you and your family with a lump sum amount in the future, making it a policy that protects you and your family. Put it’s a disciplined way to save money in the long term and is a beneficial policy to have in case of any mishap.
