Plans allow systematic enhancement of wealth with insurance
We often tend to plan important expenditures well in advance. Buying a car, initial payment of your first house and child’s fees for higher education, we save for all occasions important in our life. We also tend to plan considering, “what if I am not there”. Endowment plans are popular for enhancing our efforts towards planning and foresight.
Endowment plans are fixed duration life insurance plans with investment aspect inbuilt in them. You are entitled to get benefit in either of the two events:
By planning for the Maturity date, you can get lump sum amount to fulfill specific purpose at the end of the policy. If you do not survive the policy term, the nominee gets the sum assured. If you wish that the maturity amount is released to the nominee at the appointed time only, come what may, you may fortify the policy with Waiver of Premium rider if available. This ensures that in case of untimely death of the insured or total disability due to Accident or sickness, the family will not have to pay any more premiums and the due amount will be released to the nominee at the date initially planned.
Since these are traditional plans the maturity value is fixed. Considering other market linked options returns appear to be on the lower side but devoid of any market linked risks. They are safe plans and you will get the Guaranteed return at the given time. Further, other than the maturity amount or the sum assured, the insurance companies often give out guaranteed additions. This is generally a fixed percentage of the sum Assured paid for every year the premium has been paid for. Many insurance companies also declare Loyalty Additions or bonuses from time to time based on the performance of insurance company. All these additions are payable along with the maturity amount or the Sum Assured whichever is earlier.
Even with limited and fixed returns, endowment policies are favored by people as they provide the Risk cover and substantial financial returns at maturity. The maturity amount can be used as funds for children’s education, marriage, home renovations or even for purchasing annuities.
So endowment plans are a great way to invest and insure if:
Endowment plans are savings and investment plans taken primarily for the Survival Benefit with an added advantage of being insured.