Most of us are willing to get insured but hardly know, where to start. The biggest task while getting an insurance policy is picking the one that is suitable according to our needs, our priorities and responsibilities.
Getting the right insurance is key to securing yourself and your family against significant odds in life. This guide for understanding endowment policy will make your journey to get insured a little smoother.
What is an endowment policy?An endowment policy insures your family financially in the event of your death. However, if the policyholder survives the duration of the plan, a fixed sum is paid to the policyholder after the maturation of insurance policy. The premiums are usually small recurring amounts spread over a period of time.
Who should get endowment policy?Anyone who does not want to invest in pure life insurance can opt for endowment policy as it acts as a saving instrument. You can use it as retirement security or savings account for other future plans.
How is it different from other policies?Unlike endowment policies, term life insurance policies/pure life insurance policies do not allow you to withdraw the sum paid to the insurer, in case, the policyholder survives the insured period.
Key features of endowment policies
Flexible premium paymentsUnder endowment policy, you can choose to pay your premiums monthly, quarterly, half-yearly or a yearly. You can select the frequency of the premium payments depending on your feasibility.
Flexibility in coverYou can enhance the base plan to get additional insurance against critical illnesses, disability, and accidental death. This additional coverage is called riders, and you will have to pay some extra amount over and above your base premium to add riders to your base plan.
Tax benefitsWhat better than an insurance policy that acts as savings as well as tax exemption tool? Under Sec 80C and Section 8010(10D), you can receive a tax exemption on premium payments and maturity amount up to a certain limit.
Low-risk investmentAn endowment policy is your low-risk investment avenue. In comparison to Mutual Funds and ULIP’s, your endowment policy has a lower risk because your money doesn’t directly go into equity funds or the stock market.
Congratulations on adding new information to your insurance literacy today with this comprehensive guide on endowment policy.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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