Purchasing an endowment plan can give you the benefit of saving money while providing insurance cover. Thus, an endowment allows you to fulfill the long-term savings goal and provides a risk-free avenue to build a good corpus for the future.
What is an Endowment Plan?
An endowment plan is an insurance policy that provides a saving component along with insurance cover. In traditional insurance plans, the insurance company is only responsible to pay a death benefit in case of the demise of the policyholder. But in the case of an endowment plan, the policyholder gets a death benefit as well as a maturity benefit. The maturity benefit can only be availed if the insured survives the policy tenure.
Types of Endowment policy:
- Unit-linked endowment plan
- Low-cost endowment plan
- Non-profit endowment plan
Benefits of the endowment plans:
- Endowment plans are a financial instrument to meet the dual purpose of providing financial security to your loved ones as well as creating a corpus for the future.
- Premium payment frequency: the endowment plan comes with a flexible payment schedule as premiums can be paid on a monthly, quarterly, or annual basis.
- You can avail of additional riders and upgrade or modify your policy coverage as per your family’s requirements.
- The scheme also comes with income tax benefits. Upon the purchase of this policy, the insured can avail of income tax benefits under section 80C and section 10 (10D) of the Income Tax Act, 1961.
- Investment in endowment plans is safer compared to other riskier investment options linked to mutual funds or ULIPs because the policies are not market-linked.
What are the riders on Endowment plans?
You can add the covers to your base plan and enhance your life cover.
- critical illness cover,
- total permanent disability cover
- accidental death cover.
- waiver of premium in case of total permanent disability or for critical illnesses.