What Does Endowment Policy Mean & How Does It Work?

Endowment plans are a lot to unpack since they offer several benefits packed together as one. Firstly, an endowment plan encourages savings for the future through a steadily built corpus. Secondly, it extends insurance protection in the time of an emergency. And lastly, the package is laced with the survival benefit, which ensures that the policyholder will get access to the sum assured even if the policyholder survives the maturity period.

In this article, we have painted the accurate picture of endowment plans and how they function.

How Does An Endowment Policy Work?

Although the building features of an endowment plan are shared by all companies, a few modifications can be tuned in based on your preference of the company.
Unlike, with the other insurance plans in the market, the assured amount is released in full potential upon maturity, making it more inciting for the policyholder to receive a large sum in a single transaction. This nature of an endowment plan makes it more profitable to the policyholder in case of an emergency by toning down the financial stress.

Must Check:- Life Insurance Company

Primary Features of an Endowment Plan

Following are the features of an endowment plan that make it stand out from the other options available:

1. Long Tenure

Endowment plans entertain longer tenures reaching up to 30 years. Certain life endowment plans also offer coverage till 100 years of age. This feature is designed to help you fulfill your long term saving goals. It offers a long term saving which will be released to the beneficiaries/ nominees in case of untimely demise of the policyholder or will be given to the policyholder even if the policyholder survives the maturity period.

You may also like to read:- Difference Between Deferred Annuity And Immediate Annuity

2. Low Risk Investment

Under endowment plans, the risk generated is negligible as the plan guarantees full returns. Bonuses are added, if stated, by the company. This makes it the perfect candidate for investors seeking security while also wanting to invest their money in a life insurance plan.

Must Check:- Life Insurance Benefits

3. Flexible Premiums

The flexibility of premium is a vivid feature of an endowment plan. It is possible to pay the premium on a monthly, half- yearly, or on yearly basis, suited to your needs.

4. Free From Market Risk

Since endowment plans do not associate with capital markets, they are free from the clutches of market risk, providing it a headstart it needs from your list, if you are looking for guaranteed returns while completely dodging any risk involved in the life insurance plans.

Also Read:- What Is An Endowment Policy And Should I Get One? 

Conclusion

Given the multiple benefits served by endowment plans, it might be confusing to set apart the salient features of the plan you want to invest in and understand its working. Therefore, in this article we tackled the issue and dissected the working of an endowment plan to help you understand why it sets itself apart from the other options in your list.