An endowment policy is a type of life insurance policy that combines insurance and savings in one package. It enables the insured to save consistently over a certain period of time to receive a lump sum payment at the plan’s uncertainty. If the policyholder lives to the end of the policy’s term, then the maturity amount is paid. The death benefit is determined by the plan that an insurer selects.
Here are some features and benefits of an endowment policy to help you better understand them.
The endowment policy comes with a variety of features. Let’s have a look at it.
- Dual-purpose endowment policy plans are insurance products that provide life protection and the option to invest. This method ensures that you and your family can have a secure financial future.
- Endowment policy plans are contributing, which means that the insurance provider will publish yearly incentive schemes for the policy. Endowment plan guarantee gains once the premium payment period has ended. If the life assured dies within the policy term, then the death benefit increases or the maturity benefit increases at the time of maturity.
- You have no risks with endowment policy plans. All of your benefits are secured as long as premiums are paid on time. In addition, the policies of endowment are non-linked and thus have no market risks.
- A policyholder can make both monthly and half-yearly or even annual premium payments. In addition, depending on the insurance purchased, the policyholder can make single, regular, or restricted premium payments.
Benefits of Endowment Policy
Offers Death Benefit
It also has a death benefit attached to it. This plan offers a lifetime guarantee since it is a combination of a life insurance policy with an asset. This strategy ensures that your family has got enough money to pay their expenses even if you are not present.
Offers Maturity Benefits
This plan, unlike life insurance, has got a maturity benefit. A maturity bonus is provided if the life promised survives the whole insurance tenure. This benefit will motivate to save money methodically.
Offers Tax Benefits
Tax benefits are also available with endowment insurance plans. By paying premiums, you can reduce your taxable income under Section 80C of the Income Tax Act. In addition, when endowment policies reach maturity, there are further tax benefits available. This helps you save money on taxes during the beginning, build-up, and maturity stages of the insurance.
Offers Loan Benefit
An endowment policy can be used to get a loan. You can get a policy loan after your policy has a surrender value. The interest rates on these loans are relatively low. In an emergency or when all other alternatives for getting cash have been explored, the loan benefit can help you arrange finances.
In addition, Endowment policy plans are suitable for marriage savings and child education as well. An endowment plan is the best alternative if you are searching for a plan that provides assured returns along with tax benefits. It is an appropriate policy for people of all ages and saving capacities. Thus, your financial portfolio can become more stable with an endowment plan.