ENDOWMENT PLANS

It is a life insurance agreement constructed to pay a lump sum amount of money after the maturity period or death of the insured. The maturity term is 10, 15, and 20 years..

Life Insurance is an agreement in the form of a contract that promises an insured a certain amount of money after his/her death or any unforeseen circumstances.

The contract is made between an insurer and an insured after the insurer agrees to pay a premium for its insurance.

Life insurance is needed to overcome financial crises in times of urgency and it caters to several problems like payment of debts, mortgage, education expenditure, cash to sustain life, etc.

Reasons to buy an Endowment plan.

A policyholder will be inclined to buy an endowment plan if he/she is not a risk taker by nature. The best endowment plan to buy is the profit plan which provides a guaranteed return with a bonus at maturity with a low premium.

An Endowment plan has the following necessary facet:

Description of the plan: Conventional plans with a long-term period range from 10 to 30 years.

Provision of Returns: Profit plan categorized as bonus plan and non-profit plan categorized as non-bonus plan. Other Returns are Guaranteed inclusion, loyalty inclusion, and benefit on tax.

Returns are exclusive from inflation: an Endowment plan does not come with the provision of inflation if a policyholder wants an inflated adjusted plan then he or she could choose a unit-linked plan. Availability of Surrender value, Paid up value, and policy loan.

Types of Endowment plans

Traded with profits endowments: Sum assured, perpetual bonuses, terminal bonuses, Final addition bonus.

Unit-Linked Endowment: Premium is invested in an insurance fund in units.

Whole Life Endowments: sum assured plus profit benefit.

Single Premium Endowment: The Single Premium Endowment Plan from LIC is an endowment plan that allows the investor to get both life cover and assured returns by paying a single premium.

BENEFITS OF ENDOWMENT POLICY?

Savings, insurance, and tax benefits.
More benefits: Guaranteed returns to the insurer with minimum risk plans.
Money is transferred to the nominee if the insured dies.
Financial aid to the families of the insured.
Benefit in tax under section 80c & 10(10d) of the income tax act, 1988.
Provision of a loan under financial crisis.

F.A.Q

WHAT IS THE CLASSIFICATION OF ENDOWMENT PLANS?

Endowment with profit: If the insured survives the maturity of the policy then he/she will receive the sum assured plus a bonus but if the policyholder gets deceased then the nominee will get the amount with a bonus. Endowment without profit: If the insured survives the maturity then he/she will receive only the sum assured but if he passes away then the nominee will receive the amount.
WHAT ARE THE RIDERS PROVIDED IN ENDOWMENT PLANS?

• Death benefit due to accident. • Accident due to everlasting disability and partial disability benefit. • Benefit from a hospital in form of cash. • Income of the family benefit. • Premium waiver benefit. • Critical sickness benefits.