An endowment plan is a popular life insurance policy. Long-term capital safety and assurance of returns are the two benefits that make the plan a prudent option to attain your crucial life goals.
With an endowment plan, you can meet the following life goals –
- Ward’s higher education
- Child’s marriage
- Long-term wealth preservation
- Family member’s or dependent relative’s financial security
Endowment policy allows you to periodically save over a specific period to avail lumpsum proceed at the policy’s maturity. The maturity proceeds are paid in the case you survive the policy tenure. However, in the case of your unfortunate death during the policy period, a sum assured amount in the form of a death benefit with a bonus is paid to your policy’s beneficiary.
Apart from this, the endowment plan also assists in forming a financial cushion for your future so that you mitigate your short- and long-term financial goals of life with ease through investments. Thus, the presence of life cover and assurance to generate returns through market investments in endowment policy makes it a preferred investment for many.
How does an endowment plan help in wealth appreciation?
Investment and insurance form a crucial part of your future planning. Many of you may invest in the stock market and mutual funds to generate a corpus for your financial goals. Simultaneously, you may also purchase a life insurance cover to secure your life. What if both benefits are combined in a single plan?
As mentioned above, with an endowment policy, you can make the most of both i.e., generate wealth for your future financial goals and secure your life against any uncertain event. Here are some of the crucial benefits of buying an endowment plan that can help in wealth appreciation –
Low-risk option –
An endowment policy is a low-risk investing choice and ideal for you if your tolerance for risk is low. Endowment plans offer an assured return depending upon the performance of the assurer and do not work in a high-risk market.
Additional bonus –
There are different kinds of bonuses that an insurance company declares. Bonus is the additional money, which you receive along with your proceeds. Only the holders of the policy are provided with a share of profits and the bonus payment is conditional on you if you have surplus funds after claims in a specific year.
Bonuses are classified in the following way –
The additional amount is added to the proceeds payable on maturity or death of the endowment policy. Once you have made the reversionary bonus, you cannot withdraw it.
Discretional additional money is added to the proceeds payable made on the policy’s maturity or on your death.
Rider benefits –
You can buy the below-listed rider benefit with your endowment plan –
- Accidental death rider – Availing of this rider provides an extra benefit of accidental death cover. In simpler words, your nominee will get the accidental death benefit on your death due to an accident along with other benefits on the endowment policy.
- Critical illness cover – This rider comes across as a boon when you are diagnosed with any critical disease or illness like cancer, heart attack, kidney failure, etc. Opting for this rider benefit endows a lumpsum proceed to you on detection of such critical diseases.
- Hospital cash benefit – As per this rider, you can get the daily allowance on your hospitalization. With the cash benefit, you can even cover your post-hospitalization expenditures.
- Disability – With the disability rider benefit, you can avail of financial assistance in case you witness any partial or permanent disability.
- Waiver on premium – Availing of this rider benefit makes you not liable to make any premium payment on your endowment policy if you suffer any critical illness or permanent disability.
Maturity benefit –
On surviving the policy term or at the end of the policy or its maturity, the sum assured is provided along with the bonus. Upon maturity, the amount that you receive is tax-free.
An endowment plan is an increasingly popular policy amongst many as they offer a 2-fold benefit. They offer both life insurance and investment. If you have a regular flow of income and need a lump sum amount after a specific time period, then you must buy this endowment plan as its features can help in your wealth appreciation. However, before you avail of the endowment plan, ensure to use the online life insurance calculator to compute the approximate assured proceeds you would require based on your lifestyle, future life goals, and dependents.