Why buying an Endowment life insurance is a great idea

Endowment plan is typically a life insurance policy that offers you with the benefits of both an insurance cover and a savings plan. An Endowment life insurance plan helps you in accumulating your savings for your financial needs at every stage of your life. Additionally, the monthly savings plan provides life cover that protects your family along with protection against critical illnesses.

The policy holder gets a sum assured on a fixed date in future as per the policy terms and conditions. However, in case of sudden death of the policy holder, the company will pay the sum insured along with bonus if any, to the nominee. You can also use the amount to meet various financial needs like funding children’s education, marriage or buying a house.

Types of Endowment plans

The market is flooded with different endowment policies. Depending on the factors like income, current stage in life, individual needs, and risk appetite, you can choose the endowment policy that suit your needs.

• Unit Linked endowment plan
• Low cost endowment plan
• Full/With Profit Endowment plan
• Non-Profit Endowment plan

Why should you buy an Endowment plan?

Endowment life insurance policy promises risk-free, guaranteed returns on a specified date as long as you make the fixed monthly payments. Let's look at the advantages of these policies.

1. Serves a dual purpose

Endowment plans fulfill the dual need of a life cover and savings in a single plan. If you are someone who gets a regular stream of income and is in need for a lump sum after a period, you may consider buying an Endowment plan.

2. It is Risk-Free

As these policies provide you with risk-free assured returns, you can opt for it with sure shot returns if you are risk-averse.

3. There is no need for medical examination

Unlike most of the life insurance policies, you don't need to submit a medical exam to qualify for an endowment life insurance policy. This advantage means an endowment life insurance policy is a good option if you have a medical history that would prevent you from qualifying for an exam-contingent policy.

4. Availability of Liquidity

Liquidity is available under an endowment plan. In other words, if there is an emergency, you can withdraw money up to a certain limit from the corpus of your endowment policy. This maturity benefit can be used for fulfilling different financial needs of your life. Term insurance policies do not provide liquidity or opportunity of long-tern savings.

5. Makes you disciplined

Buying an endowment policy will put your worries at ease by not only saving your hard-earned money but also by providing you a disciplined route to a long-term savings.

Additional Benefits

Policyholders who take the option of profit plans are eligible for bonuses. Bonuses are given after the company has taken into account the surplus funds after expenses, cost and claims. The two types of bonuses are:

Revisionary Bonus – This bonus is the additional money to be paid to the nominee in the event of death of policyholder or added to maturity amount in case of with-profits policy.

Terminal Bonus – This bonus is the discretionary amount of money that gets added to the payment to be made at end of the policy or on the account of death of the policyholder.

Other Rider benefits include Family income benefit, Critical illness benefit, Hospital cash benefit, Premium waiver benefit etc.

The bottom line is, everyone needs a risk-free guaranteed returns investment plan as part of their portfolio. So, if you want to have a goal-based savings plan to build a corpus to secure your future needs, you can go ahead and buy endowment policy. Remember that, the longer the term of the policy, better the total benefit.