What is Endowment Plan?

Under the Full/With Profit endowment plan, a basic sum is assured to the policyholder at the start of the plan. However, the final payout is comparatively much higher than the basic amount since it combines specific bonuses announced by the company during the plan's tenure.

Once declared, the bonuses become a part of the policy and are received by the beneficiary upon a claim or after maturity.

In the case of a non-profit endowment plan, a predetermined lump sum amount is payable at the time of maturity or to the beneficiary in case of policyholder's demise, whichever occurs earlier. However, unlike full endowment plans, they come without any bonuses, and the sum remains unchanged. These are fully guaranteed in nature.

The maturity benefit with endowment plans remains intact as long as the policyholder pays timely premiums. The maturity benefit depends on several factors, such as the policy tenure, premium amount, policyholder's gender, age, and more. The amount received as maturity benefit is also tax-free

An endowment plan ensures that your loved ones maintain a peaceful life even in times of crisis. The life insurance benefit provides them with a lump-sum payout, a fixed amount, given at the time of claim settlement. Some policies also offer additional benefits in the form of a reversionary bonus.

Also Read: Benefits of Life Insurance.

Under Section 80C, the premiums payable under an endowment plan are eligible for a tax deduction. Furthermore, there are tax benefits on the maturity benefit as well. It helps reduce financial stress on your family during the policy tenure and in a time of need.

Once a policy acquires a surrender value, you can take a policy loan. It might be helpful during an emergency when you need immediate financial assistance.

There are several riders offered along with the endowment plan to strengthen their coverage. Some of these are accidental death rider, critical illness cover, disability, waiver of premium, and more.