What Is The Right Time To Purchase An Endowment Policy?

An endowment policy is a type of life insurance that also serves as a way to save money. It helps you save money on a monthly basis over a certain length of time in order to get a lump sum payment at plan maturity if the life assured lives longer than the policy's term. According to the policy's terms and circumstances, the assured person receives their promised sum at a certain future date.

While an endowment plan offers many benefits at any age, purchasing one at a young age can give you additional benefits. In your late twenties or early thirties, you should consider purchasing an endowment plan.

When you're young, you must therefore buy an endowment program because you'll have lower overheads when you're in your mid-30s or early 40s. Investing in an endowment plan when you're young can help you build a future corpus and give financial security to your family or loved ones. The eventual payment for an endowment policy's mortality benefit and survival advantage is higher and more unusual than the benefits gained from a typical term plan like a life insurance plan.

What Is The Right Time To Purchase An Endowment Policy?

Know about the right time to buy an endowment plan and its benefits below:

1. Start Early

The returns on these plans will be larger, and your family will be able to manage their financial obligations in your absence. You can always assign a regular premium amount and become used to paying it if you start early before you arrange other personal commitments. You have the financial means to invest on a regular basis, such as monthly, quarterly, or yearly. 

Tax deductions and exemptions are available under Sections 80C and 10D of the Income Tax Act of 1961, respectively. Investing early will result in more tax advantages. Before you start making monthly payments, you can compare different premium rates. Throughout the investment, it should be steady and inexpensive.

2. Risk Level

This endowment plan is a safer and better investment option with low to moderate risk, according to current endowment patterns. Endowment plans are moderately risky because they do not invest directly in the stock market or equity funds like mutual funds.

3. Better Returns On Investment

In the event of the policyholder's untimely death, an endowment plan provides financial security to the policyholder's dependents and loved ones while also helping to develop a larger corpus for future needs. The returns on investment in an endowment plan are substantially higher than in a traditional life insurance plan, whether it's the mortality benefit or the survivor benefit.

4. Coverage Adaptability

Aside from basic endowment coverage, the assured can choose from a range of add-ons and rider benefits on the standard base plan, including critical sickness coverage, accidental death benefits, and total and permanent disability coverage.

5. Tax Benefits

One of the most appealing features of an endowment plan is that you can always take advantage of tax breaks on premium purchases and payments.

The premium paid on endowment plans, as well as the maturity total and final dividends, are exempt under the Indian Income Tax Act, 1961, Sections 10 (10D) and 80C.

Conclusion

Endowment plans are vital and should be taken advantage of early in life to secure a significant lump sum amount for your family's financial security, tax savings, and a long-term corpus amount. You can improve your saving and investment discipline. Endowment plans come in a variety of shapes and sizes. You have the option of adding as many riders as you like, such as accidental death, incapacity, severe sickness, and so on. If you have financial inconsistency in receiving your salary on a regular basis or if your income is not consistent, you can always choose a flexible premium option. Regularly investing, on the other hand, will assist you to get superior long-term results.

Also read - What are Advantages and Disadvantages of Endowment Plan?

Know What Are The General Exclusions Under An Endowment Policy

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.