Skip to main content

What is Endowment Plan

Indian Endowment Plans

An endowment plan is a type of life insurance policy that not only provides coverage to the policyholder but also serves as a savings instrument. Endowment plans are particularly popular in India because they offer a dual benefit of insurance and investment, which helps individuals meet their financial goals.


How does an endowment plan work?


An endowment plan requires the policyholder to pay a regular premium for a specific period of time, which is known as the policy term. The policy term can range from 10 to 30 years, depending on the insurer and the type of plan. At the end of the policy term, the policyholder receives a lump sum payout, which includes the sum assured and any bonuses that may have been accrued over the years.


Endowment plans are of two types - participating and non-participating. Participating endowment plans distribute the profits made by the insurer among the policyholders in the form of bonuses. Non-participating plans, on the other hand, do not offer any bonuses.


Benefits of endowment plans


One of the main benefits of an endowment plan is the life insurance coverage it provides. In the event of the policyholder's untimely death, the sum assured is paid out to the nominee, which can help provide financial stability to the family.


Another benefit of an endowment plan is the savings component. As the policyholder pays regular premiums, a portion of the premium is invested in a variety of instruments such as stocks, bonds, and government securities. This can help the policyholder build a corpus over time, which can be used to meet various financial goals such as buying a house, funding their child's education, or planning for retirement.


Endowment plans also offer tax benefits under Section 80C of the Income Tax Act. The premiums paid towards the policy are eligible for a tax deduction of up to Rs. 1.5 lakh per annum. Additionally, the maturity proceeds of the policy are tax-free under Section 10(10D) of the Income Tax Act.


Choosing the right endowment plan


When choosing an endowment plan, it is important to consider the following factors:


Premium: The premium paid towards the policy should be affordable and should not cause a strain on the policyholder's finances.


Policy term: The policy term should be chosen based on the financial goals of the policyholder. A longer policy term can result in higher returns, but it also means a longer commitment towards paying premiums.


Sum assured: The sum assured should be adequate to provide financial security to the policyholder's family in case of their untimely death.


Bonus structure: If opting for a participating plan, it is important to understand the bonus structure of the insurer and their track record in distributing bonuses.


Conclusion


Endowment plans are a popular investment option in India as they offer a combination of life insurance coverage and savings. They provide a guaranteed sum assured, tax benefits, and a potential for higher returns through bonuses. When choosing an endowment plan, it is important to consider the premium, policy term, sum assured, and bonus structure to ensure that it aligns with the policyholder's financial goals.

Comments

You may also like

Hair Oil Review: Kesh Upasham

Real Onion Hair Oil: Kesh Upasham  Are you tired of hair loss? And looking for a hair oil which can save your hair? If yes, then It's the time to choose a real onion hair oil. Today I'm going to reveal the name of an onion hair oil which contains 22 genuine Ayurvedic ingredients including onion and Bhringraj oil extract. The oil also contains Hibiscus oil, Almond oil, Fenugreek oil, Curry leaves oil, Aloe vera oil, Amla oil, Lavender oil, Apricot oil, Lemon oil, Basil oil, Black seed oil, Castor oil, Tea tree oil, Olive oil, Peppermint oil, Thyme oil, Rosemary oil, Sesame oil, Coconut oil and Sunflower oil. The oil is manufactured by Bajaj Ayurvedics and distributed by Arinjay Enterprise.  Quality and effectiveness of the oil I used several Onion hair oils for controlling my hair loss, but nothing did work. Finally I found this and got the desired result. The quality of the oil is really amazing. It has not only reduced my hair loss, my hair loss literally stopped after using t

Leather bag review: Rolando Amani Women's Cross-body Leather bag

 Rolando Amani Women's Leather Bag Buying a leather product online is really tough decision. Because you never know whether they are going to cheat you or not on the material. So, in this article I am going to share a real user's experience with you.  Is it original leather? This is the million dollar question. So I would like to address this question at the very beginning of this article. My answer is "yes, it is real leather". When the bag arrived, I opened the wrapper and tried to feel the touch of the bag. I touched various parts of the bag. The touch itself says that it's genuine leather. You can also smell the inside of the bag, you will get that leathery smell. So, be assured and now you can read the full review. However, there is no shortcut method of testing original leather. You have to know it only by using, which i did. Size and capacity This bag is pretty big in size as compared to other similar bags for women. It can easily hold a file along with all

বাঁকুড়ায় জমি কিনতে চান?

 বাঁকুড়া বিশ্ববিদ্যালয়ের সামনে জমি কিনে দূরদর্শিতার পরিচয় দিন বাঁকুড়া শহরের মধ্যে জমির দাম শুনে চোখ কপালে উঠছে? অস্বাভাবিক নয়। শহরের বিভিন্ন জায়গায় এখন বাসযোগ্য জমির দাম কাঠা পিছু ৬-৮ লাখ। কোথাও কোথাও আরও বেশি। কিন্তু বাঁকুড়া শহরের উপকণ্ঠে গড়ে ওঠা বাঁকুড়া বিশ্ববিদ্যালয় আগামী দিনে হয়ে উঠতে চলেছে বাঁকুড়া শহরের প্রাণকেন্দ্র। ঠিক যেমন ভাবে গোলাপবাগ হয়ে উঠেছে বর্ধমানের সেরা জায়গা। ভবিষ্যতের এই প্রাণকেন্দ্রে বসবাস করার জন্য এখন থেকেই কম দামে কিনে রাখুন জমি। বিশ্ববিদ্যালয় ক্যাম্পাসের ঠিক বিপরীত দিকেই সাজানো হয়েছে বেশ কয়েক বিঘা জমির এক উপনগরী। ১৬ ফুট ও ১৪ ফুট চ‌ওড়া রাস্তা দিয়ে ভবিষ্যৎ জীবনের চলার পথকে সুগম করা হয়েছে। রাস্তার কোনায় অবস্থিত প্রতিটি জমির কোণ কেটে রাস্তাকে আরও চ‌ওড়া করা হয়েছে। উঁচু জমি হ‌ওয়ায় কখনও জল জমার সম্ভাবনা নেই। বিশ্ববিদ্যালয় ক্যাম্পাসের নিকটে হ‌‌ওয়ার ফলে এই এলাকায় এখন থেকেই বসবাস করা যাবে। এখান থেকে ৫০০ মিটারের মধ্যে মলিনা নগর হাউসিং-এ অনেকগুলি পরিবার এখন থেকেই বসবাস করছে। এখানে জমির দাম‌ও আপনার নাগালের মধ্যেই, কাঠা প্রতি মাত্র ২ লক্ষ ১০ হাজার