Plans allow systematic enhancement of wealth with insurance
Endowment Policy is one of the specific kinds of investment plans, where a person gets a lump sum amount after a specified Term on the Maturity of that plan or on death. Endowment plans have the following kinds of maturity intervals:
3.Twenty Years or more
These policies are aimed at long term profits and have traditional profit margins. The profit is evaluated on the basis of number of days for which the policy has been into existence.
These policies are similar to investment plans of the life insurance policies but the only difference lies in the fact that you can enjoy the maturity benefits before your own demise as well. Otherwise, the life insurance policies generally payout a lump sum amount after death.
Following are a few of the available types of endowment plans you can take up as retirement plans or money back plans:
An amount is guaranteed to be paid known as sum Assured and this can be increased depending on the investment routine performance by annual bonuses. People get regular bonuses at maturity and also a non guarantee terminal bonus. When the investment market is down, the encashment or Surrender Value may be decreased by MVR rule. MVR is Market Value Reduction option available with the fund manager for managing the reducing funds.
These plans provide an option to invest the Premium in the form of units of a unitized insurance fund. These units are used by the insurance company to provide for the insurance cover. You can quite often select the funds which provide for your premiums and their proportion. Unit prices are declared on periodic basis and the final value of the policy determines the current value of the units.
Traded endowment policies abbreviated as TEPs or SHEPs (Second Hand Endowment Policies), are also called with-profit endowments, which have been sold to other person during their term.
The TEP market provides an opportunity for the buyers to buy endowment policies for more than the surrender amount offered by the insurance company. The buyers will be interested to buy the same at the mentioned higher rates because on maturity they will be able to reap real benefits.
LCE or Low cost Endowment Plan is an endowment plan in which a pre-estimated growth rate in the future will meet the value of the final amount and the depreciating life insurance element. This guarantees that the final amount will be paid as a minimum amount in case of death or an urgent financial crisis.
Full endowment plans are designed to provide a Sum Assured at the beginning of the policy to the Policyholder after death. The sum assured may also be higher than estimated if an estimated growth rate comes into effect.
Endowment plans are accompanied with higher amount of benefits and also have the life insurance element associated with them. Therefore, they are the most suitable kind of investment options available as money back plans or retirement plans. If you go ahead and buy a life insurance policy on one hand and an investment policy with a bank on other hand you will not be able to get the desired benefits during financial emergency or death. For instance, during Critical Illness if you discontinue your fixed deposit you will get only your base amount with no additional benefits. However with endowment plans you will get the benefits for the total period of time for which your money has been a part of the policy.