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What is an endowment policy and when should you get it?





The endowment life insurance policy covers the risk and offers returns after the maturity. If there is a risk, the sum assured will be paid to the policyholder. The lump sum that you obtain through the maturity will be used for life’s important events such as children’s education, children’s marriage and funding the retirement. The endowment plan will fulfill the dual need of the insurance and the lump sum benefit. The policyholder will enjoy the tax benefits under Section 80C and Section 10 (10D).

Benefits of endowment insurance plan

  • ·        The endowment policy covers the risk
  • ·        Risk-free assured returns
  • ·        Offers financial protection to their loved ones
  • ·        Ensures savings to meet the life’s milestones
  • ·        To build corpus for a long-term
  • ·        Best combination of insurance and investment
  • ·        The bonus paid on the policy will be paid at the maturity


Who can buy endowment plan?

The endowment plan can be bought by policyholder who can contribute regular premium to build a corpus on a long-term basis. People who spend the money beyond their requirements will fail to save money for long-term needs. Thus, a kind of discipline will be instilled in policyholder with the help of endowment plan.

Businessmen and professionals can go for endowment plans as their long-term financial interests will be protected by the insurance plan. The policy is ideal for risk-averse individuals. The endowment plan is designed to take care of the needs of common man.

Important factors of endowment plan

There are various kinds of endowment plans in the market. You should choose a policy as per the age, financial need, premium contribution and risk appetite.

The premium rate of an endowment plan is higher than the term plan. If you would like to take advantage of very high assurance, you should choose term plan and it is cheap as well.

The insurance company’s past track record will also help you choose the policy. If the company pays dividend in a very efficient manner, you can choose the endowment plan. The returns will play an important role when you choose the endowment plan for savings purpose.

Before buying an insurance plan, you can visit the official website to get information about the past performance of the company. You can also compare the returns offered by two or more insurance plans of different companies so that you will settle for the best insurance plan.

Best endowment plans in India

The following are some of the best endowment plans offered by various insurance companies in India:

LIC New Endowment Plan

  • ·        It is a participating non-linked plan.
  • ·        The insurance plan offers risk coverage and savings.
  • ·        Offers surrender benefit
  • ·        Loan against the policy is available
  • ·        Additional coverage for the disability and accidental death riders
  • ·        Minimum and maximum age – 8 and 55 years
  • ·        Maximum maturity age – 75 years
  • ·        Minimum and maximum sum assured – Rs. 10 lakh and no limit
  • ·        The premium should be paid throughout the tenure of the policy


Bajaj Allianz Save Assure

  • ·        Choice of 15 or 17-year term
  • ·        Premium payment term – 10 years or 12 years
  • ·        Additional riders to enhance the coverage
  • ·        Limited premium, non-participating, non-linked plan
  • ·        Value for money policy (with rebate on high sum assured)
  • ·        The death benefit of 115% of the sum assured
  • ·        Entry age – 1 year to 60 years
  • ·        Maturity age – 18 years to 75 years


 HDFC Life Sampoorn Samridhi Plus

  • ·        A participating plan with guaranteed additions
  • ·        Built-in accident benefit rider
  • ·        Two plan options- simple endowment or endowment with whole life coverage
  • ·        Corpus increase through the simple reversionary, terminal bonus and interim bonus
  • ·        On maturity sum assured plus guaranteed additions are paid
  • ·        Entry age – 30 days to 60 years
  • ·        Maturity age – 18 years to 70 years
  • ·        Premium paying frequency – monthly, quarterly, half-yearly and annual
  • ·        Endowment plan term – 15 or 20 years
  • ·        Endowment with whole life plan term – 15 or 20 years


Kotak Classic Endowment Policy

  • ·        Participating unit-linked plan
  • ·        Entry age – 0 to 55 years
  • ·        Policy term – 15 to 30 years
  • ·        Guaranteed base income per annum – 8% or 12.5% of sum assured
  • ·        Premium alteration is permissible
  • ·        Revisionary and terminal bonus on the death benefit


SBI Life Smart Bachat

  • ·        Traditional endowment plan
  • ·        Offers reversionary bonus and terminal bonus
  • ·        Premium is payable for a limited period of time
  • ·        Policyholder can choose the tenure, sum assured and term
  • ·    Two options - Simple endowment plan  and endowment with accidental and permanent disability benefit


Conclusion

You can choose an endowment policy to build corpus on a long-term along with the risk cover. It is a low-risk option and you can use the maturity value to fund various important events in life. If the policyholder dies, the sum assured plus bonus will be paid to the nominee.

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