What Are The Key Benefits of Endowment Plans

Endowment Insurance covers the person for a specific period. Thus the individual can insure himself till the period he desires. In the event of the death of the individual nominee receives the sum assured and bonuses the insurance company has paid for the years the policy has been in force. Upon maturity the policyholder receives the sum assured and bonus for the term of the policy. Endowment insurance policy can be classified as Endowment-with profit and Endowment-without profit plans.

Endowment without profit plans are also known as term insurance plans which offer the nominee sum assured in event of policyholders death. Endowment with profit plans, upon maturity the policyholder receives the sum assured and bonus for the term of the policy and in event of the death of the policyholder, nominee receives the sum assured plus bonus.

Benefits of Endowment Policies:

Endowment policies have the following benefits

  1. Low-risk plans as the maturity benefits are guaranteed and well defined.

  2. Gives financial security to your loved ones.

  3. Tax benefits under section 80 (C) under Income tax Act.

Additional Benefits of endowment Policy:

Different types of Bonuses are given by the insurance providers. Bonus is the extra money which is additional to the proceeds that are distributed to the policyholders. Only policyholders taking up the with profit plans are eligible for this benefit. Bonuses are given only after the insurance company has taken into account surplus funds after costs, claims and expenses are accounted for.

Bonus is of two types:

  1. Revisionary Bonus: It is the additional money to be paid to the nominee in the event of death of policyholder or added to maturity amount in case of with-profits policy. Once this option is taken it cannot be changed if the policy is in force till maturity or death of the insured.

  2. Terminal Bonus: It is the discretionary amount of money that is added to the payments to be made at end of the policy or on the death of the policyholder.

Rider Benefits:

There are additional riders for the policyholders to choose from as per requirements of policyholders

  1. Accidental Death Benefit

  2. Family Income Benefit

  3. Critical Illness Benefit

  4. Hospital Cash Benefit

  5. Waiver of Premium Benefit

  6. Accidental Permanent Total/Partial Disability Benefit

Features of Endowment Policies:

Some of the features of Endowment policies include

  1. Sum assured along with any bonuses are paid to the nominee in event of the death of the policyholder and in case the policyholder survives till the tenure of the policy he/she gets sum assured.

  2. Endowment policy not only provides financial protection to the family of the policyholder but also helps policyholder build corpus for the future.

  3. Premiums can be paid in monthly, quarterly, half yearly and annual options.

  4. Policyholder can take additional riders like critical illness and personal accident and disability benefit.

  5. Policyholder gets benefits under Section 80 C and Section 10 (10) D.

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Endowment Plan Termination: Factors to Consider before Surrender