Endowment plans are the long term saving plan plus you get the advantage of insurance. The major property of Endowment policy is that it covers the insured party for a specified period of time. This way the insured person gets the right to stay insured till the time he wants to remain with the policy. During the term of the policy as the situation changes concerning the life of insured party i.e. upon the death, the nominee as registered gets the proposed sum which was assured with the bonus as applicable by the company. Here, bonus is subject to be paid if the number of years the policy was in force as suggested in the application contract. In the case of maturity, the policy contract gets over and therefore the life of the insured party does not get covered anymore by the Endowment policy. Insured party gets the proposed sum which was assured with the interest as applied by the company and the contract.
Types of Endowment plans
Endowment policies are commonly formed into two types –
1. Endowment without profit policies / Term insurance plans
It guarantees only the assured sum to be paid to the nominee upon death of the insured without any profit, bonus or any other benefit.
2. Endowment with profit policies
It guarantees the assured sum to be paid to the nominee upon death of the insured with any profit, bonus or any other benefit for the duration of years the policy was in force. In case, the insured person survives in the policy term then he gets the assured sum and the bonuses attached to it.
Endowment insurance policies carry the guaranteed policy property that ensures the payment of money to the insured person or its beneficiaries. Another point related to the guarantee is that whether insured person is alive or not he or his nominee gets the money. Other benefits of Endowment Policy provide lower risk plans to invest because in this policy maturity benefits are guaranteed. Plus, this type of policy facilitates your family financial security. It also assists you in availing tax benefits as premium paid for the Endowment Policies is eligible for tax deduction under section 80C.
There is additional bonus attached by the insurance companies. But, only Endowment with profit policy holders is entitled to get the share of these benefits. Plus, there are some conditions specified by the insurance companies which make bonuses applicable for the insured party. These bonuses can be classified as:
1. Reversionary Bonus
It is the additional amount of money joined with the sum assured on death or on the time of maturity. Only Endowment with profit policy holders is entitled to get the share of these benefits.
2. Terminal Bonuses
It is the unrestricted additional amount of money joined with the sum assured on death or at the time of maturity. It means that the insured person can change or modify the amount of bonuses by his choice. There is an important note here that specifies that the bonus declared by the company is not payable on the spot of its declaration and it is usually declared annually. When it is declared then it starts accumulating and becomes ready to be paid only on death or at the time of maturity of the Endowment policy.
There are rider benefits too which are available as per the insured person requires. It states the additional benefits that apply to the determined coverage of specific risk coverage such as accidental death, accidental permanent total or partial disability, family income, waiving of premium, critical illness or hospital cash benefits. Also, there are maturity benefits that are tax free and applicable only after the completion of the term of the policy.
You Must Compare
You must compare endowment policies before making any investment because it is very much important to know the best endowment plan perfect for your needs. You can use the comparison tools online to receive the fast and reliable help. You can get the exact information on the websites where you can easily compare the premiums of different insurance companies. You can also check on the guaranteed benefits and other maturity benefits as stated above for your information.
Endowment plans are suitable for conservative investors. This states the approach towards ultra-conservative and slightly aggressive investors. Type of plan, minimum and maximum entry age, policy term, mode of premium payment, minimum and maximum sum assured, loan availability, surrender value, maturity and death benefits control the comparison of various endowment plans.
The return on the Endowment plans are based on the performance of company investment track and economy trends prevailing in the market. In case, the economy is going upwards, then returns become higher.
You cannot get the best insurance company and best plan altogether because either you will find the best insurance company or the best plan meeting the choice of your interest. In current market situations it is not possible that you get the advantage of both at the same time of investment.
