Features Of An Endowment Plan You Must Know About

Endowment policy combines dual objectives of life cover and a savings opportunity. Endowment plans provide financial security to the family of the life assured in difficult circumstances such as the untimely death of the life assured during the policy tenure. In case of an untimely death of the life assured during the policy tenure, a death benefit is provided to the nominee. This plan also provides a maturity benefit at the end of the policy term, in case the life assured survives the policy tenure. Endowment plans also offer wealth appreciation as they are participating in life insurance policies. 

Features Of An Endowment Plan You Must Know About

Below mentioned are some features of an endowment policy that you must know about before purchasing one:

• Financial Security: Endowment plans are a great way to ensure financial security for you and your family regardless if you survive the policy tenure or pass away during the policy tenure. In case of your untimely death during the policy tenure, a death benefit along with an additional bonus (if any) shall be provided to your family. The help of the death benefit payable in case you pass away during the policy tenure will help your family to maintain a healthy lifestyle in your absence. 

• Maturity Benefit: Endowment plan provides a maturity benefit at the time of plan maturity. In case the life assured survives the entire policy tenure, a maturity benefit shall be provided to the life assured at the end of the policy term. Endowment plans let you invest your money and create a corpus for yourself and your family for a period of time in the form of premiums, which shall be provided to you after the premium payment ends. 

Must Read: Endowment Plan: All You Need To Know About Coverage, Suitability, And Premium

• Wealth Appreciation: Endowment policies are participating. i.e., these plans participate in the profits of the life insurance company.  These plans do not guarantee bonuses but allow wealth appreciation by declaring yearly bonuses (if any). The bonuses shall be provided along with the maturity at the end of the policy term or along with the death benefit in case the life assured passes away. 

• Policy Loan: Endowment policies allow policy loan facility after the policy has attained the surrender value. Once an endowment policy has attained the surrender the life assured can apply for a policy loan. The interest charged on such loans is comparatively lower. 

• Tax Benefits: Under endowment policies, the life assured can avail tax benefits. The pad for an endowment policy qualifies for tax benefits under Section 80C of the Income Tax Act, 1961. The maturity benefit payable under an endowment policy is also eligible for tax exemptions to some extent. 

To Conclude

Endowment policies are a good type of investment tool that provides financial security to the life assured and the family of the life assured irrespective of survival of the life assured for the entire policy tenure or them passing away during the policy term. In difficult circumstances, endowment plans can help the family of the life assured to maintain a healthy lifestyle and pursue their goals in absence of the life assured.

Also Read: What Does Pure Endowment Mean?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.