Home
About Us
Contact Us

Endowment Plan

  1. Home
  2. Life Insurance
  3. Endowment Plan

Endowment Plan

Unlike Term Plan, endowment plan pays you out the sum assured along with the profits in both the cases- death and survival. This plan charges a higher premium which is being invested in the asset market- Equity and Debt.

An endowment is a policy in which the insurer promises to pay the lump sum amount at the time of maturity. Majorly maturities are ten, fifteen or twenty years up to a definite age limit. Some plans also pay an amount in case of critical illness. Endowments amounts can be cashed early and the insured will receive the surrender value which would be determined basis how long the policy has been running and how much has been invested in it.

Types of Endowment Policies:

There are basically three forms of endowment policies which one can choose from.

  • Unit Linked Endowment - Under Unit Linked policies, the insurance premiums are directed into multiple units which are held under a specific investment fund that can be selected by the insured.

  • Full Endowment - Under the same, the basic amount ensured to be provided will be equal to the death benefit, right from the start of the policy. Based on the speculated market-based appreciation, the final payout will be comparatively higher.

  • Low Cost Endowment - This endowment plan is there for individuals to accumulate the funds which have to be paid after a specified time period, usually mortgage.

Key Features of Endowment Policies:

  • You will get the sum assured under an endowment policy either on survival to the term or on death occurring within the policy term.

  • Endowment policies are available as 'With Profit' and 'Without Profit' plans.

  • Under Endowment policies, bonus for the full term is payable on the date of maturity or in the event of death, whichever is earlier.

  • Premiums will be limited to shorter term or can be paid as single premium.

  • Premiums cease on death or on expiry of the term, whichever is earlier.

Benefits of Endowment Policies:

Endowment policies offers several benefits, a few of which are listed below:

  • An endowment policy will offer the insurance cover during the policy term.

  • It will pay a lump sum amount at the end of the policy term i.e. once the policy has matured.

  • It will serve dual purpose. Not only does it work as an insurance policy but also serves as a long-term investment offering decent returns.

Endowment policies come with tax benefits: In terms of investing, endowment policies are safer as compared to other investment options and offer returns which are close to those offered by mutual funds.

Endowment policies enable long-term savings: Under an endowment policy, you will surely receive a significant amount upon maturity.

Most endowment plans will extend the insurance and provide assured benefits even after the maturity date, in some cases up to a time when the life insured attains the age of 100.

Insured have the option of opting for additional riders which provide cover for specific illnesses, critical illnesses, disabilities, etc.

How Do Endowment Policies Work?

They are not very difficult from regular insurance policies. These policies not only offer the required cover, but also help them save regularly over a specific period of time. Under the same, the insured or his/her family will receive a lump sum maturity amount which can be utilized for meeting financial needs like purchasing property, children's education, organizing a wedding or preparing for one's retirement.