What is an Endowment plan?
If you’re looking forward to a plan that offers you dual benefits of savings as well as an insurance cover, then an endowment plan is a perfect choice for you. While the savings feature in an endowment plan inculcates a disciplined habit of investment, the insurance cover makes provision for the financial security of your family. Additionally, the maturity amount that is payable also ensures the fulfillment of the needs of your family in times of financial emergency.
When you invest in an endowment plan, the policyholder receives a sum assured on a fixed date based on the terms and conditions of a family. At the time of the death of a policyholder, the nominee receives the same from the insurance company. This sum received by the insurance company meets the financial goals of your family not only in times of death but also the retirement of the policyholder.
List of the features of endowment plans:
1. Survival benefits
When you opt for endowment investment plans, you are liable to receive the survival benefit in the form of sum assured. This sum assured is eligible for the nominees of the policyholder during the death of the policyholder. Moreover, the nominee of the policyholder is applicable to receive the bonuses on the behalf of the policyholder.
2. Tax savings
Surprisingly, endowment plans do offer its investors with tax savings benefits. When a policyholder invests in an endowment plan, he is entitled to receive tax benefits on the premium payments as well the final payout as per section 80C of the Income Tax Act, 1961. Under section 10(10D) of the Income Tax Act, 1961, the taxes are exempted on the maturity benefits as well. It is one of the most coveted tax saving investments out there.
3. High returns
Investment in endowment policies is preferable for those investors who wish to grow their corpus overtime for the well-being of their family. Under an endowment policy, the payout, (i.e. the maturity benefit) helps the investor to generate higher returns. These returns ensure that your money in this insurance-investment policy does not go waste.
4. Low risk
Unlike ULIPs, endowment policies are a low-risk option of investment. Low risk simply means a safe and secure investment for the protection of your family. Since the money invested in endowment plans is not directly invested in either equity markets or stock markets, it does not involve high risks.
5. Premium payment
Endowment plans allow a flexible approach towards the investor’s frequency of premium payment. An investor can make the payment based on either monthly basis, quarterly basis or annually basis. Additionally, he can select the frequency of the premium payment based on his policy.
With the help of an endowment plan, you can not only enjoy the benefits of life cover but also savings habit to the fullest. The right endowment plan will not only make the right utilization of your hard earned money but also imbibe the right habits of savings in you. An endowment policy is apt for people of any age group as well as saving capacity.
Now that you know where to invest money, when are you planning to make an investment in an endowment plan? Whatever you decide, see to it that you compare multiple options before settling on one plan. Select only that plan which benefits you in the long run by meeting the goals of your family. That way, you’ll simply ensure the financial security of your family, even without your presence or at times of an unforeseen event like death.