Endowment Plans- All You Need To Know
Insurance and investment form an important part of planning for your future. You might be investing in the stock market to generate wealth and raise a corpus for your goals. Also, you must be having life insurance to secure these goals. What if both these features were combined into a single plan?
Endowment plans offer you all that and more. Learn more about the mechanism and benefits provided by this dual-purpose policy below.
What is an endowment insurance plan?
An insurance plan only offers death benefit at the demise of the policyholder. However, an endowment plan is a unique kind of insurance plan that combines investment with insurance. If the policyholder survives till the expiry of the endowment plan, he/she will receive the sum assured with the bonus as maturity benefit. In case the policyholder dies before the maturity period, the endowment plan will pay the death benefit to the beneficiaries. Thus, endowment policy is a lucrative instrument with dual features of savings and financial protection. Endowment plans come with higher premiums as they yield higher returns in the form of ‘sum assured’ as compared to a standard insurance plan. Now that you know what is an endowment policy, who is it for?
Who should buy it?
The following people should consider buying an endowment plan-
- The savings in the endowment plan returns a sizable lump sum amount after the maturity. Business people, salaried individuals and professionals should consider buying an endowment insurance plan to meet their long term financial goals which require a large sum of money.
- The savings component of the endowment insurance inculcates financial discipline in people. Thus, career freshers should opt for the plan for savings which can yield a lump sum amount.
- The savings-cum-security feature of the endowment plan also makes it an ideal choice for people looking for investment and savings in the long run, along with financial protection.
- Endowment plans have low-risk susceptibility, and thus, risk-averse people should also consider purchasing an endowment plan.
Why should one purchase an endowment plan?
Endowment policyholders enjoy maturity benefits at the end of the policy term. The lump sum amount facilitates in fulfilling your financial needs and life goals like higher educational expenses, funding a trip, or purchasing a house or a vehicle. The corpus accumulated over the tenure of the policy helps you meet your long term financial goals.
The endowment plan also protects your dear ones from financial uncertainties, should any unfortunate event befall. Your family is covered against all risks, and the endowment policy cushions them from financial hardships.