Endowment Plan

What is an Endowment plan?

Endowment plans are life insurance plans that offer life cover along with a fixed lump sum or income benefit, to the policyholder. An endowment policy can be used to build a risk-free savings corpus, while providing financial protection for the family in case of an unfortunate event. This simplicity of an endowment plan has over the years made it an attractive savings plan for all.

A good endowment policy provides you with the confidence to meet any financial emergency in the future. It provides you marriage with returns that can help you meet your non-negotiable life goals, such as your child’s education or, fulfilling the needs and aspirations of your loved ones and yourself, and more.

Endowment Plan

How does an Endowment Plan Work??

An endowment plan offers fixed returns at the end of the policy term. At the same time, the plan also offers a life cover that gives financial coverage to your loved ones in case of an unfortunate event. In an endowment plan, you can choose the amount you want to pay as premiums, basis your requirements. The life cover offered by the plan is generally 10 times your annual premium. The returns offered by the plan are fixed at the time of the purchase of the plan. Depending on the plan you choose, you may get the flexibility to pay your premiums monthly, half-yearly, yearly, or all at once. Similarly, you may choose to get the returns from the plan as a lump sum or as regular income.Below is an example that can help you understand this better.Mr. Mehta is 35 years old. He is planning for his daughter’s future education expenses. He invests in an endowment plan for 15 years. He chooses to pay ₹ 5 lakh every year as premium towards the plan. He gets a life cover of ₹ 50 lakh. Additionally, he will get returns on his premiums towards the end of the policy term.

Who Should Consider Buying an Endowment Plan?

An endowment plan can be ideal to create an alternate source of income. It can offer you lump sum income in future.

Benefits of assurein Income For Tomorrow (Long-Term)

Plan

Life cover

assurein Income For Tomorrow (Long-Term) provides life cover* that secures your loved ones financially in case of an unfortunate event

Plan options

Income with 110% return of premium – In this option, you receive your income for a duration chosen by you after you have paid all your premiums.

Tax benefits

The tax benefits provided by the plan add to the overall returns from the plan. The plan provides the below tax benefits as per The Income Tax Act, 1961

Save the Date’ feature

You can choose this date to coincide with special days, such as your anniversary, birthday of your loved ones, and more, or with the date of the payment of your dues, such as your loan EMIs, tuition fees of your child, and more.

An endowment plan is a type of life insurance policy that combines elements of both insurance coverage and savings/investment components. It is designed to provide a predetermined sum of money, known as the endowment benefit, to the policyholder or beneficiaries upon the maturity of the policy, or in case of the policyholder’s death during the term of the policy.

Here are some key features of an endowment plan:

Dual benefit: An endowment plan provides both insurance coverage and a savings/investment component. If the policyholder survives the term of the policy, the policy matures and the policyholder receives the endowment benefit, which is a lump sum payout. If the policyholder dies during the term of the policy, the designated beneficiaries receive the death benefit, which is typically higher than the total premiums paid.

Maturity period:Endowment plans have a specific maturity period, which is the length of time the policy needs to be in force for the policy to mature and the endowment benefit to be paid out. Maturity periods can vary depending on the policy, ranging from 5 to 30 years or more.

Premiums: Policyholders pay regular premiums for the duration of the policy, which typically include both the insurance coverage cost and the savings/investment component. The premiums paid are used to provide the insurance coverage, cover administrative expenses, and invest in a designated fund or funds to generate returns.

Savings/Investment component: One of the distinguishing features of an endowment plan is the savings/investment component. A portion of the premiums paid is invested by the insurance company in a designated fund or funds, and the policyholder may receive returns in the form of bonuses or dividends, depending on the performance of the investments and the terms of the policy.