Endowment plans are one of the most common types of life insurance plans. They are very popular and many people choose to get the endowment plans for their life insurance needs. But what makes an endowment plan so useful? Let us take a look at the points mentioned below to get the answer.
What Should I Do With My Endowment Policy?
Are you planning to buy an endowment policy but are not too sure as to what you can do with it or how it can help you? If yes, then take a look at the ways in which the plan can be of use to you:
- Makes you a disciplined money-saver: The biggest advantage of an endowment plan is that it helps you save money in a disciplined manner. You are obligated to pay the regular premiums. The premium money is invested and your wealth grows.
- Covers your life: An endowment plan is a very basic form of life insurance. It covers your life in exchange for the premium that you pay. So when you buy an endowment plan, you get a life cover instantly too.
- Keeps your loved ones financially secured: The life cover assures that your family will get a sum assured if you die suddenly within the policy period. So you get a lot of mental peace knowing that in your absence, your near and dear ones won’t have to struggle with their finances.
- Combines insurance with investment: The endowment plan beautifully combines the components of insurance and investment in one common platform. The premium that you pay is broken up in parts. While one part is safely locked away in a life fund, the other part is invested and your money builds up over time.
- Offers risk free investment option: The endowment plans usually invest your money in very low risk investment tools such as government bonds and cash funds. So there is practically no chance of you losing the money you invest through an endowment insurance policy.
- Helps achieve a financial goal: The endowment plans are long term investments. So they allow you to build up a corpus and meet the long-term financial goals. For instance, you can start saving in an endowment plan now for your child’s marriage twenty years down the line. You can build up a healthy corpus in this manner.
- Helps in saving tax: The premiums you pay towards the endowment plan are tax exempted under Section 80C of the Indian Income Tax Act.
- Loan available against an endowment plan: Your endowment plan can bail you out of sticky financial situations. This is possible because you can take a loan against an endowment plan to tackle a financial emergency.
- Easy to buy: Another benefit of an endowment plan is that you can buy it very easily. These days, the plans are available online. You can compare the plans and make a purchase instantly.
- Can become a regular source of income: The endowment plans that offer a bonus can become a regular source of income for you. You can withdraw the profit at regular intervals and get a steady flow of income coming your way.
- Long term cover: Like mentioned above, an endowment plan can be bought for many years. So you can stay covered for a long time and keep your family financially secured too.
- Can cancel the policy if needed: The terms and clauses of an endowment plan are highly practical. If at any time you feel the plan is not delivering, you can simply cancel the plan and look for a different form of life cover.
- Different types of endowment plans available: Endowment insurance is available in various forms. You can choose from a child plan, a retirement plan, a whole life plan, etc. So you have your options and can take your pick from many types of endowment plans.
Tips of the trade
Ask any one for advice on endowment insurance and they would tell you to compare the plans. There is no substitute to comparing the plans as only when you compare, will you find the best plans at the best rates. So keep this very important tip in mind before you buy a good endowment plan. Once bought, pay your premiums on time and stay covered in a truly useful manner.