Endowment policy
An endowment policy is, in fact, is a type of life insurance policy, which, in addition to the coverage of the life of the person insured, the insurer has to make regular money for a certain period of time,
so you can receive a lump sum after the policy ends, in the case survives the policy period. This may be used to meet a variety of financial needs, such as the funding of pensions, for children's education, or marriage, or the purchase of a home.
While the endowment plan will be considered to be one of the best tools which you will be able to help you reach your goals, you need to consider the different types of endowment plans for the purchase.
Listed below are all the different types of an endowment to the plans from which you can choose according to your financial needs and circumstances.
Different types
1) Unit-linked endowment plan
The amount you are paying, is divided into 2 parts. Part of it will be used for the investment in various financial options, in accordance with your personal preferences, and in the second part, we used to be in the assurance of your life.
The return on investment depends on the performance of the particular market. This plan option is best suited for people who are at a high-risk tolerance and want to have a high rate of return on investment.
2) Guaranteed Endowment Plan
As the name suggests, under this plan, the insured person will receive a guaranteed benefit. At the end of the insurance policy, the insured person will receive a Guaranteed Amount, with complete loyal additions(if applicable).
A policy of bonuses can not be guaranteed. So, with the help of a policy of a fund, you will receive a two-fold benefit: guaranteed policy benefits and non-guaranteed bonuses.
3) Full, With-Profits Endowment Plan
The policyholder is guaranteed to get the assured sum of the
amount at the time of purchasing the policy. However, depending on whether or
not the company declares a bonus, the final payout including the surplus amount
may be higher upon policy maturity or death of the insured.
In addition, the total amount that will be paid out to the
policyholder, it is slightly higher because it includes the guaranteed amount,
plus an additional bonus (if any).
4) Cheap Endowment Plan
Under such a plan, the policyholder is allowed to collect money that is usually paid for a specified period of time. This plan is designed to help the insured to make corpus as to the security of their future and help them to pay off their loans, and home mortgages.
Even in the event the
insured dies before the policy goes into effect, the nominees, and/or
beneficiaries receive a Guaranteed Amount of money.
5) Non-profit, endowment Plan
Such endowment plans are guaranteed to offer additions in
place of the bonuses because they don't contribute to the life insurance
company's earnings. This will help to generate a return to the policy-holder
and that makes them very attractive compared to the other plans in the market.
that is, the amount is paid as maturity to the policy-holder
The benefits of the policy
It has the following
advantages: A. This is a low-risk investment plan, as the maturity amount is
guaranteed. B. the endowment plan acts as a security to your loved ones. C. You have tax benefits in endowment policies.
1) A high rate of return on the investment
An endowment plan, which provides for financial security, helping to create wealth in the long term, to meet the family's financial goals and objectives.
The benefits are paid to the insured upon the survival of the policy or After the policy has expired, or when the policy expires, the insured person is guaranteed to return the amount paid, plus a bonus for the duration of the period of insurance.
The amount received after the period for payment is not subject to the tax.
2) It is available to riders
Accident death rider: The insurer shall have the additional benefit of accidental death, with a fatal outcome. In other words, the nominee will receive a cash benefit in the event of accidental death of the insured person, along with a post-death.
Critical Illness Cover: This rider will work as a benefit
when the insured person is diagnosed with critical illnesses, such as heart
attack, cancer, kidney failure, etc., etc. The acceptance of this rider
provides for a lump-sum payment to the insurer in the event of such critical
diseases that have been can be detected.
Disabled rider: this type of rider provides financial support in
the event of permanent or partial disability, this type is considered as one of
the most useful riders to give financial assistance at that time.
Hospitals cash payments: Under this rider, the policyholder
gets a day-by-day(daily) recompense if there should is an occurrence of
hospitalization. With cash advantage, this rider also covers
post-hospitalization costs.
Premium Waiver: With this rider, the policyholder isn't
required to pay any premium for his/her endowment plan in the event that he/she
experiences permanent disability or critical illness
3) Tax Exemption
A tax on the premiums paid will be retained in accordance
with the provisions of Section 80, while the amount of the refund, including
the final payment, and can also be deducted under section 10 (10D) of the
income tax Act.
4) Risk factor
Compared to mutual funds in which money is invested directly
in equity markets, and, therefore, carries a greater risk, a traditional fund
plans to help you out of your money, with little or no risk.
5) Bonuses
The bonuses are categorized as follows.
Reversionary Bonus - Take back the Bonus of Extra money that is added to the value in the event of the death or the return of the policy is to have a profit. As soon as the reverse of the bonus is, it can not be canceled if the policy expires before the maturity date or on the death of the insured person.
The deadly bonus - a Discretionary extra amount of money or any
other benefits during the period of insurance, or in the event of the death of
the insured person.
Who should buy an endowment policy?
According to experts, people with a regular income to the total income and the demand for a one-off payment for a certain period of time maybe considering the purchase of a goal-oriented plan.
However, those of you who are only interested in the life
cover, and not the savings part, should rather be going for the term plan. This
is not only due to the fact that term plans are cheaper than endowment plans
and provide more coverage than that and they are also simpler to understand.
The endowment policy provides an organized way to make money and is to save money for future needs. An added benefit is that it has life risk coverage, which will help family members when the insured passes away, a person can find that the returns are low, however, it is risk-free as the case of a guaranteed a certain amount of money.
You can also take advantage of the
tax benefits that, if certain conditions are met.
However, the form of regular compensation on the basis of
the plan can be purchased only if the policy-holder, is certain about a steady stream of income, which has helped them to pay the premiums regularly
Above are the full details of the endowment plan policy
