What is an Endowment Policy?

Explore the manifold benefits of an endowment plan to understand if it checks all your boxes for financial security and investment.

Insurance provides many kinds of plans that suit various requirements. An endowment policy is one such interesting plan that can be a part of your investment portfolio . An endowment policy ensures life insurance coverage and also helps you build your wealth which is paid at the time of maturity. It comes with dual features combining life coverage and saving plans. An endowment policy essentially provides both death cover and maturity benefit. With an endowment plan, you can plan for your future goals like paying for your child's education abroad, building a corpus of funds to retire well, or planning for your childÂ’s wedding.

How Does an Endowment Policy Work?

An endowment plan offers you the flexibility to choose the premiums you want to pay towards your plan. You may pay your premiums monthly, half-yearly, quarterly, yearly or all at once depending on the type of plan you choose. You can also decide the period of the policy you want to choose which may depend on the plan you are taking.

The life cover offered by your endowment plan would generally be 10 times your annual premium, however it may be lower or higher depending upon policy terms & conditions. The life cover provides security to your loved ones in case you are no longer there to provide for them.

Endowment plans also provide you with a fixed amount called the maturity amount at the end of the tenure of the plan. This maturity amount is fixed at the time of the purchase for a guaranteed benefit plan and is free from any market fluctuations. It may include additional returns from savings plus the sum assured. It is ideal for creating an exigency fund. Thus, an endowment plan is suitable if you want to build savings at low risk while securing your loved ones financially.

As with every policy, we recommend that before choosing the plan, you should get familiar with the terms, conditions, duration, method of payment, expected returns, and all other benefits. This way you can enjoy the benefits you seek from a policy.

Features Of Endowment Policy

1. DUAL BENEFITS: Endowment plans provide you with life cover as well as financial growth. The life cover secures your loved ones financially in case of an unfortunate incident.Along with life cover, you will also get the lump sum at the policy maturation leading to extra monetary benefits through savings. It is a lucrative and cost-effective method to build your wealth for the future and secure your family against any uncertainties in life.
2. FINANCIAL GOALS: An endowment plan may help in building your wealth systematically and saving your money for your defined financial goals. Your systematic investment in an endowment plan can help you build a strong financial base so that you can plan some expenses, big buys or even vacations!
3. AUTONOMY: You can choose a plan that best suits your lifestyle and finances. From the tenure of the plan to the premium amount, endowment plans offer a wide range of flexibility and choice.
4. TAX EXEMPTIONS: Endowment plans also provide tax benefits. The premiums paid for the policy may be eligible for tax deduction, according to the provisions of Income Tax laws as amended from time to time. As per the Indian Income Tax Act, premium amount can be claimed under section 80C. The overall limit of exemption under Section 80C can extend up to only 1,50,000 INR.
5. LOANS: Endowment policies may offer you the option to take a loan on your policy. In case of any financial emergency, you can opt for a loan up to a certain defined limit. These loans are governed by product terms and conditions.

Things To Know Before Buying an Endowment Plan

You should take one step at a time while deciding the best endowment policy for you. Here are some important points you should consider before finalising your decision:

• YOUR GOALS: Plan your requirements wisely and decide which plan is the best for you. If you are looking to build a corpus through investments, then an endowment plan can be a great option.
• TERMS & CONDITIONS: To avoid any misunderstanding and avail all benefits of the policy, go through all the terms of the policy and read the policy document carefully. Some of the points to understand are- method of payment, premium duration, policy term & flexibility, loans, withdrawals, sum assured and returns.
• PICK WHATÂ’S RIGHT FOR YOU: An endowment plan comes with multiple appealing benefits. However, you should focus on your needs and choose a plan which will benefit you and your family the best.

IS An Endowment Plan Ideal For You?

An endowment plan comes with multiple benefits. The main benefit of owning an endowment policy is that it covers your financial worries like- your childÂ’s education, marriage expenses and your retirement. Apart from this if you are looking to build a fund for your future financial needs, it is a saving plan that gives you that additional cherry on the top.

So, if you are someone who wants to make a strong financial net for his dependents, or build wealth from mid to long-term investment returns, and want to focus on saving, then you should go for an endowment plan.

Generali Central New Assured Wealth Plan gives you financial security in the form of a lumpsum death benefit and a guaranteed lump sum amount at the end of your policy term. It also gives you Guaranteed Additions every year from the end of 8th policy year, calculated at a simple percent rate of the Sum Assured . So that you donÂ’t have to worry about the rising cost of living. When the policy matures, the beneficiaries are paid the maturity benefit. This policy is highly recommended for people who aspire to build a corpus to cover heavy expenses like childrenÂ’s education and marriage.

CONCLUSION

Endowment policy is a perfect fit to cover your big expenses and build long to mid-term wealth. It is a significant financial tool to look after all major expenses like- education, marriage, retirement,. An endowment policy is a safe option that comes with dual benefits in terms of maturity and death benefits, higher returns, flexibility of payment and tax benefits,. To fully ensure all benefits are availed go through the details carefully in the policy document. You can also visit our website or talk to our trusted and experienced advisors .