A traditional insurance plan pays out a lump sum assured in the event of the death of the policyholder. The beneficiaries\/dependents\/nominees of the life insured receive a benefit (called a death benefit) if the worst should come to pass for the insurance holder. An endowment plan works the same way, but has an additional clause that states that a lump sum payment will be made to the insurance holder if he or she survives till the end of a specified period known as the \u201cmaturity period\u201d, \u201cendowment policy term\u201d or \u201csurvival term\u201d. There are variations to the payout clause in endowment policies \u2013 some companies have a lump sum payout on the detection of a critical illness, or other life changing events.<\/p>\n
Endowment policies carry plenty of benefits, a few of which are listed below:<\/p>\n
Endowment policies are not very different from regular insurance policies. These policies, like insurance policies, not only provide cover to the life insured, but also help them save regularly over a specific period of time. Once the policy has matured and given that the policy holder has survived the policy term, they will receive a lump sum maturity amount which can be utilized for meeting financial needs like purchasing property, children\u2019s education, organizing a wedding or preparing for one\u2019s retirement.<\/p>\n
The decision to take on an endowment plan must be well thought out and its benefits, returns on investment, etc. must be compared against those of similar investments.<\/p>\n
If you are a healthy individual in need of\u00a0life insurance\u00a0cover and an investment that helps you save on tax in addition to giving you huge returns, you may choose to opt for a combination of financial products, or opt for a single endowment plan which does the same thing.<\/p>\n
You may purchase a\u00a0life insurance policy\u00a0and invest in a separate mutual fund, etc. and expose yourself to the risks involved in a mutual fund investment. It\u2019s quite ideal for those with a high risk appetite. For those who find that their life savings are too valuable to leave to chance, an endowment life insurance policy is ideal.<\/p>\n
An endowment policy is far less risky than a mutual fund investment, and also has ULIP options which invest in various equity and debt schemes. In addition to being a tax saving investment with guaranteed returns at the end of the term, it also provides comprehensive life insurance cover \u2013 which is a win-win situation for the investor (and his dependents).<\/p>\n
There are arguments against endowment plans because the returns on investment are not as high as those offered by mutual fund, equity and debt related investments of similar amounts for similar tenures. Purchasing two separate financial products \u2013 one for a life insurance policy and one for a product directed to give you returns on investment will pay off better with a higher percentage of returns. That being said, it must be noted that while there are better options for returns on investments, endowment policies are first and foremost insurance policies. They just have the added benefit of giving you a return on the premium you\u2019ve invested \u2013 on plan maturity.<\/p>\n
Consider your risk appetite and requirement for life insurance cover before taking any major financial decision.<\/p>\n
There are 3 types of basic endowment policies which one can choose from.<\/p>\n
Just like other insurance plans, the market is now flooded with different types of endowment policies. There are several factors which come into play, when it comes to choosing the right endowment insurance policy. Individual needs, current life stage, income and risk appetite are just a few factors to consider. Given that the premiums of endowment plans are pricier as compared to term plans, cost of premiums is also a deciding factor. After premium costs, another crucial factor to keep in mind is the insurance provider\u2019s track record in terms of the bonus payments. Beside these, some other factors to keep in mind would be the customer service provided by the insurer, their claim settlement ratio, financial status of the insurer, etc. when choosing an\u00a0endowment policy<\/u>, pick one which is simple and does not come with features and benefits which are difficult to comprehend and the finer details of the policy may get lost in the fine print.<\/p>\nDocuments Required:<\/h2>\n
In order to apply for an endowment policy, customers will mostly be required to submit basic documentation such as the following:<\/p>\n
With the Endowment Plan Premium Calculator you can know the details like Premium amount, maturity value, surrender value, loan value and returns of the Policy. Endowment Policy Premium calculators will ask you to input information like your age, policy term and amount of sum assured. Using this information, the calculator will compute the premium which you will be required to pay towards your endowment policy.<\/p>\n
Most endowment policies offer add-ons to enhance the protection provided by the policy. Some of the riders commonly available with endowment policies are as follows.<\/p>\n