fathima tabasum

Written By

Fathima Tabasum

ashok manwani

Reviewed By

Ashok Manwani

What is an Endowment Policy & How Does it Work?

Listen to the Audio Overview of This Article

Endowment Plan Overview

The table below highlights the key features of the endowment plan, covering important aspects like sum assured, eligibility, premium options, and available riders.

Feature Description
Sum Assured The minimum sum assured typically starts at ₹1 lakh, while the maximum can reach several crores, depending on the policyholder's eligibility and the insurer’s terms.
Purpose Provides a combination of life insurance coverage and a savings plan. It helps policyholders build a corpus while ensuring financial protection.
Eligibility Age criteria typically range from 18 to 65 at entry, with maturity age limits often between 70 and 85. Specific eligibility varies by insurer.
Premium Premiums vary based on several factors, including the sum assured, policyholder’s age, chosen riders, policy term, and premium payment frequency.
Riders/Add-ons Optional riders to enhance coverage, including Accidental Death Benefit Rider, Critical Illness Rider, Waiver of Premium Rider, etc.
Premium Payment Options Includes regular pay (periodic payments throughout the policy term), limited pay (payments for a shorter duration), and single pay (one-time lump-sum).
Tax Benefits Premiums paid qualify for tax deductions under Section 80C of the Income Tax Act. The maturity benefit may also be tax-exempt under Section 10(10D).

What is an Endowment Plan?

What is an Endowment Plan
  • An endowment plan is a life insurance policy that combines a death benefit with a savings component. It offers financial protection for your loved ones while helping you build savings over time.
  • With regular premiums, you gain both insurance coverage and a growing financial reserve. Upon maturity, you can use the savings for goals like education, buying a home, or retirement. These plans provide flexibility to meet your long-term financial needs.

How Does Endowment Plan Work?

An endowment plan is a type of life insurance policy that combines insurance protection with savings. It not only offers life cover but also helps you accumulate a lump sum amount over a specified period. Here’s how an endowment plan works:

Sum Assured

The endowment plan provides a sum assured, which is the amount paid to the policyholder at maturity or to their beneficiaries in case of the policyholder’s unfortunate death during the policy term.

Policy Term

The policy has a predefined term chosen by the policyholder when purchasing the plan. During this term, the policy remains active as long as the premiums are paid on time.

Premium Payments

Policyholders are required to make regular premium payments to keep the policy active. The premium depends on factors such as the sum assured, the policyholder's age, the policy term, and any additional riders opted for.

Maturity Benefit

If the policyholder survives the policy term, they will receive a maturity benefit, which includes the sum assured along with any bonuses declared by the insurance company.

Death Benefit

In the event of the policyholder’s death during the policy term, the nominee will receive the sum assured along with any applicable bonuses as a death benefit.

Financial Growth

Since endowment plans also act as a savings vehicle, they allow policyholders to build a financial corpus over time. The savings component grows throughout the policy term, ensuring both life cover and financial returns.

Rider Benefits

Policyholders can enhance their endowment plan by adding riders such as critical illness riders, accidental death benefit riders, or waiver of premium riders, offering additional protection by paying an extra premium.

Illustration of Endowment Plans

Ravi, a 40-year-old entrepreneur, wants to build a secure financial corpus for his children’s education and secure their future in case of any unforeseen events. He chooses an endowment plan with a sum assured of ₹50 lakhs and a policy term of 20 years. His premium payments are set annually, and he adds a critical illness rider for additional coverage.

Criteria Details
Policy Term 20 years
Age of Insured 40 years
Sum Assured ₹50 lakhs
Premium Payment Annual
Annual Premium ₹80,000 (approx.)
Maturity Benefit ₹50 lakhs + bonuses

Understand the Scenarios of Endowment Plans

Scenario 1

Scenario 2

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Death During the Policy Term

If Ravi passes away within the 20-year policy term, his family will receive the sum assured of ₹50 lakhs plus any accrued bonuses. This payout will help cover important financial obligations and provide a secure future for his family.
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Outlives the Policy Term

If Ravi survives the 20-year policy term, he will receive the maturity benefit of ₹50 lakhs along with any bonuses accumulated during the policy term. This amount can be used to fund his children’s education or other financial goals.

Types of Endowment Plans

Explore the different endowment plans available in India, each tailored to meet various financial needs and preferences.

  • Unit-Linked Endowment Plans (ULIPs): These plans combine insurance with investment in market-linked funds, such as equity, debt, or hybrid options. They offer the potential for high returns based on market performance, making them suitable for individuals with a higher risk tolerance. Note that returns are not guaranteed and vary with market conditions.
  • Full Endowment Plans (With-Profit): These plans guarantee a sum assured that is paid to the nominee upon the policyholder's death. If the policyholder survives the term, they receive the sum assured plus any non-guaranteed bonuses. This type provides a blend of guaranteed returns and potential additional benefits.
  • Non-Profit Endowment Plans: Like full endowment plans, these provide a guaranteed sum assured but do not include bonuses. They offer guaranteed policy additions as part of the maturity benefit, providing stability and predictability without the potential for additional non-guaranteed returns.
  • Low-Cost Endowment Plans: These plans offer a guaranteed lump sum either on maturity or in the event of death but without bonuses. They are often chosen to meet specific financial goals, such as paying off a mortgage and providing a safety net for the policyholder's family.

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Key Features and Benefits of Endowment Plan

Here are the key features and benefits, demonstrating how they can contribute to your financial stability and security.

Guaranteed Returns with Life Cover

Guaranteed Returns with Life Cover

Endowment plans offer a guaranteed lump sum payout at the end of the policy term, ensuring financial security for your beneficiaries if you pass away and a substantial sum if you survive the term. This dual benefit provides both insurance protection and a financial reserve.

Flexibility and Liquidity

Flexibility and Liquidity

These plans allow you to access funds during emergencies by foreclosing the policy after the lock-in period. This flexibility helps you manage immediate financial needs while maintaining the policy’s value.

Tax Benefits

Tax Benefits

Premiums paid on endowment plans qualify for tax deductions under Section 80C, and the maturity amount is tax-free under Section 10(10D). This tax advantage reduces your overall tax burden and enhances the plan's financial benefits.

Low-Risk Investment

Low-Risk Investment

Endowment plans are designed as low-risk investment options, offering better returns than traditional savings accounts. The insurer manages the investments, ensuring stability and security for your funds.

Loan Facility

Loan Facility

You can use your endowment policy as collateral to secure a loan, allowing you to access additional funds without jeopardizing your assets. This feature provides financial assistance while keeping your policy active.

Balanced Insurance and Investment

Balanced Insurance and Investment

Endowment plans combine life insurance with investment benefits, ensuring that you or your beneficiaries receive financial benefits whether you survive the policy term or not. This balance makes them a comprehensive financial tool.

Long-Term Financial Planning

Long-Term Financial Planning

Endowment plans are ideal for meeting long-term financial goals such as education or retirement. They support future milestones with guaranteed payouts and accumulated bonuses, helping you plan for significant life events effectively.

Why Do You Need an Endowment Life Insurance?

Why Do You Need an Endowment Life Insurance

While life insurance policies with just a death benefit are popular, many people are looking for policies that provide both insurance protection and a savings component. This is where an endowment life insurance plan comes in - it not only protects your loved ones in case of unfortunate events but also ensures you save for future financial goals.

Here are other major benefits that an endowment life insurance plan provides:

  • Dual Benefit of Savings and Protection: An endowment plan offers life insurance coverage along with a savings component. This means your family will be financially secure in the event of your demise, but if you survive the policy term, you’ll receive a lump sum maturity benefit that can help you meet major financial goals.

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Some Relatable Real-Life Examples

Example 1

Example 2

Example 3

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Rajiv Sharma, Government Employee

Rajiv, 45, a senior government employee, is looking forward to retirement in the next two decades. However, he also wants to ensure that his wife is financially secure in case of his sudden demise.

Rajiv chose an endowment plan with a sum assured of ₹50 lakhs. Not only does it give his family protection in case something happens to him, but it also helps him systematically save for a comfortable retirement, thanks to the maturity benefits at the end of the policy term.

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Neha Malhotra, Software Engineer

Neha, a 30-year-old software engineer, recently became a mother and wanted to secure her child's future while also building a financial corpus. She opted for an endowment plan with a sum assured of ₹30 lakhs, which gives her peace of mind knowing that in case of any unforeseen event, her family will be taken care of.

At the same time, if she outlives the policy term, she will receive a lump sum amount that can be used for her child's higher education or other major expenses.

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Meera Kapoor, Small Business Owner

Meera, a 40-year-old small business owner, has big dreams for her children’s education and family’s future. She wanted a plan that offers both life insurance protection and savings. She opted for an endowment plan with a sum assured of ₹25 lakhs.

With this plan, Meera feels secure that her children will have a financial safety net if she’s not around, and if she survives the policy term, the savings she accumulates will help fund her children’s higher education.

Who Should Buy an Endowment Plan?

Endowment Plans are ideal for individuals seeking a combination of financial coverage and a disciplined approach to building savings. Consider buying an Endowment Plan if you wish to:

Seek a Low-risk Investment with Financial Coverage

Seek a Low-risk Investment with Financial Coverage

Ideal for those who prefer stability over high-risk, high-reward investments, an endowment plan offers the security of guaranteed returns with life cover.

Have Specific Long-term Financial Goals

Have Specific Long-term Financial Goals

If you’re looking to build a lump sum for non-negotiable goals like education, marriage, or retirement, an endowment plan can help you achieve this with disciplined savings.

Have a Regular Income

Have a Regular Income

These plans suit those who wish to invest small amounts regularly, ensuring a steady buildup of a corpus over time.

Secure your Dependents Financially

Secure your Dependents Financially

If you have dependents, this plan ensures their financial security with a guaranteed sum assured in case of your untimely demise.

Prefer Lower but Guaranteed Returns

Prefer Lower but Guaranteed Returns

Endowment plans provide lower but guaranteed returns without exposure to market risks for risk-averse individuals.

Eligibility Criteria for Buying Endowment Plan

While the requirements may differ slightly between insurers, here’s a general outline of the standard eligibility criteria for an endowment plan.

Criteria Eligibility
Age Entry age typically ranges from 18 to 65 years; maturity age ranges between 70 and 85 years.
Minimum Sum Assured Varies by insurer; generally starts from ₹1 lakh.
Premium Payment Based on the sum assured, policy term, age, and chosen riders.
Medical Examination Medical tests may be required depending on the sum assured and age.
Citizenship/Residency Available to Indian citizens and Non-Resident Indians (NRIs). 

Documents Required for an Endowment Policy

When purchasing an endowment life insurance policy, the following documents must be ready to ensure a smooth application process.

Identity Proof

Address Proof

Age Proof

Income Proof

Photograph

Fully Filled Proposal/Application Form

How to Calculate the Premium for an Endowment Plan?

How to Calculate the Premium for an Endowment Plan

To determine the premium for an endowment plan, you need to account for several factors, including the policyholder's age, health, lifestyle, sum assured, policy term, and any additional riders. Let’s walk through an example to illustrate the calculation.

Consider the following details for our example policyholder, Arjun Patel:

  • Age: 30 years
  • Health: Non-smoker
  • Policy Term: 20 years
  • Sum Assured: ₹10 lakhs

 

Insurance companies calculate premiums based on these variables. For an endowment plan, the calculation generally includes a base rate determined by the insurer, which takes into account the sum assured, age, and health status. Additionally, riders and policy terms can affect the final premium.

Let’s assume the base rate for this example is ₹50 per thousand of the sum assured. Here’s how the premium is calculated:

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Factors Affecting Endowment Policy Premiums

Factors Affecting Endowment Policy Premiums

The premium for an endowment policy is determined based on several key factors, which collectively influence the cost you will pay. Here’s how it works.

  • Sum Assured: The amount you choose as the sum assured directly impacts the premium. Higher sums assured lead to higher premiums, representing the amount the insurer commits to paying out.
  • Age of the Policyholder: Your age when purchasing the policy affects the premium. Generally, younger policyholders pay lower premiums than older individuals due to the lower risk associated with younger ages. This typically ranges from 18 to 65 years.
  • Policy Term: The duration of the policy also affects the premium. Longer policy terms may result in higher premiums, as the insurer’s risk extends over a more extended period.

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Things to Consider When Buying an Endowment Plan

Things to Consider When Buying an Endowment Plan

When purchasing an Endowment Plan, making well-informed decisions is essential to ensure the policy aligns with your financial goals. Here's a checklist to guide you.

1. Plan Early for Maximum Benefits

Buying an insurance policy at a younger age typically results in lower premiums. It allows for a longer tenure, enabling you to build a substantial corpus when the policy matures.

2. Understand Your Financial Needs

Assess your life stage, income, family’s financial needs, premium-paying capacity, and risk tolerance. This will help you select a plan for your current and future financial goals.

3. Evaluate Premium Payment Options

Choose a premium payment frequency that suits your financial situation - whether it's regular payments for salaried individuals or a single lump sum payment for business owners. Options for monthly, quarterly, or annual payments should also be considered.

4. Review Bonuses and Guaranteed Additions

While bonuses depend on the insurance company's performance and aren't guaranteed, some policies offer guaranteed additions to your policy each year, provided premiums are paid on time. Understanding these can help you gauge the potential growth of your policy.

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What are the Riders Available for Endowment Plans?

Riders are optional add-ons to your base plan that, for an additional premium, offer extra coverage under various scenarios. Here are some of the significant riders available in endowment plans.

Accidental Death Benefit Rider

Accidental Death Benefit Rider

This rider offers extra coverage if the policyholder dies from an accident. It provides additional financial support to dependents beyond the base plan. If the policyholder survives an accident but later passes away, this rider ensures the nominee receives the sum assured within 120-180 days from the accident. It helps cover medical expenses and financial losses.

Critical Illness Rider

Critical Illness Rider

This rider provides financial support if the policyholder is diagnosed with severe illnesses like cancer or heart disease. It helps cover treatment costs and household expenses, serving as an income replacement to ensure that both treatment and family finances are protected during the illness.

Accidental Total and Permanent Disability Benefit Rider

Accidental Total and Permanent Disability Benefit Rider

This rider offers financial assistance if the policyholder suffers a partial or total permanent disability from an accident that prevents them from working. For instance, losing both eyes or legs qualifies as a permanent disability. The policyholder receives a portion of the sum assured regularly for a set period to support their family during difficult times.

Waiver of Premium Rider

Waiver of Premium Rider

This rider keeps the policy active if the policyholder cannot pay premiums due to physical disability. If the policyholder is disabled for six months or more or diagnosed with a critical illness, future premiums are waived. This ensures the policy remains valid until maturity and benefits are paid out as planned.

Terminal Illness Rider

Terminal Illness Rider

This rider ensures the sum assured is paid to the policyholder if diagnosed with a terminal illness, where death is expected within six months. It provides financial support to manage treatment costs, support, and other needs during a challenging time.

Income Benefit Rider

Income Benefit Rider

This rider provides the family with a monthly income rather than a lump sum if the policyholder dies during the policy term. It helps replace the policyholder's income, making it easier for the family to manage daily expenses and avoid financial difficulties.

What is Cash Value in Endowment Policy?

How Does Cash Value Grow Over Time?

How Does Cash Value Grow Over Time
  • The growth of cash value in an endowment policy is driven by the investments made by the insurance company. These investments can include a mix of stocks, bonds, and other assets. The growth rate of your cash value depends on the performance of these investments, which can fluctuate with market conditions. Many policies also provide a guaranteed minimum interest rate to ensure steady growth.
  • The longer you hold the policy, the more time the cash value has to grow. However, it's essential to consider that various factors, such as investment performance or early policy surrender, can impact this growth. Thus, it's essential to carefully evaluate these aspects when choosing an endowment life insurance policy.
  • Overall, the cash value of an endowment policy can provide a valuable savings component, growing over time and contributing to your long-term financial planning.

Difference Between Endowment Plan And Term Plan

While endowment plans offer a combination of life insurance and savings, comparing them to term plans helps clarify which option better suits your financial goals and insurance needs.

Point of Comparison Endowment Plan Term Plan
Definition A type of insurance plan that provides life coverage along with a savings component, where the policyholder receives a maturity benefit if they survive the term. A pure life insurance plan that provides financial protection for a specified period, typically without a savings or investment component.
Purpose Financial Coverage + Investment. Endowment plans are ideal for those who combine life insurance with long-term savings goals. Financial Coverage. Term plans are designed to provide financial security to your family in case of your untimely demise without an investment component.
Coverage Typically covers individuals from age 18 to 75 years. Typically covers individuals aged 18 to 75, though some plans offer coverage up to 99 years.
Maturity benefit If the policyholder survives the policy term, a maturity benefit is paid out, which includes a guaranteed sum assured and may also include non-guaranteed bonuses. Generally, no maturity benefit is paid if the policyholder survives the term. However, some term plans offer a 'return of premium' option, where the premiums paid are refunded at maturity.
Pricing Premiums are higher due to the savings component and the guarantee of a payout on death or maturity. Premiums are generally lower because they provide pure life coverage without savings or maturity benefits.
Payout Provides both a Death Benefit and a Maturity Benefit (if the policyholder survives the term). Provides only a Death Benefit if the policyholder passes away during the policy term.
Loan Eligibility Once the policy acquires a surrender value, it can be used as collateral to take out a loan. Loan facilities are typically not available for term plans.
Bonus Endowment plans may offer bonuses such as reversionary bonuses, terminal bonuses, or loyalty additions. These bonuses are added to the sum assured and paid at maturity or on death. Term plans do not typically offer bonuses; they provide a fixed sum assured as the death benefit.

Tax Benefits of Endowment Plans

Section 80C: Premium Payments

Premium Payments
  • Deduction Limit: Premiums paid for endowment plans qualify for a tax deduction under Section 80C, up to a maximum limit of ₹1.5 lakh per financial year.
  • Eligibility: To qualify for the deduction, the premium paid should not exceed 10% of the sum assured for policies issued on or after April 1, 2012. For policies issued before this date, the premium should not exceed 20% of the sum assured.
  • Applicability: This deduction is available to individuals and Hindu Undivided Families (HUFs).

Section 80D: Health Riders

  • Deduction for Health Riders: Premiums paid for health-related riders, such as critical illness or accidental death benefit riders, are eligible for a tax deduction under Section 80D.
  • Deduction Limit: The deduction limit under Section 80D is up to ₹25,000 for individuals below 60 years and ₹50,000 for senior citizens. This is in addition to the limit under Section 80C.

Section 10(10D): Maturity Benefits

Maturity Benefits
  • Tax Exemption: The maturity benefit, including the sum assured and bonuses, is fully exempt from tax under Section 10(10D).
  • Conditions: The tax exemption is applicable if the premium paid does not exceed 10% of the sum assured for policies issued on or after April 1, 2012. For policies issued before this date, the premium should not exceed 20% of the sum assured.
  • TDS: If the policy does not meet these criteria, a 5% tax deduction at source (TDS) may apply on the payout if it exceeds ₹1 lakh in a financial year.

Limitations of an Endowment Policy

Limitations of an Endowment Policy

While endowment plans offer a blend of insurance and savings, they might not be the perfect fit for everyone. Before you commit, it's essential to be aware of some potential drawbacks that could affect your financial goals. Understanding these limitations will help you make a more informed decision about whether an endowment plan aligns with your needs.

1. Lower Returns Compared to Market-Linked Investments

Endowment plans typically offer guaranteed returns, which are generally lower than those of market-linked investment options like mutual funds or stocks. If your goal is to maximise wealth creation, the conservative nature of endowment plans might not meet your expectations.

2. Higher Premium Costs

The premiums for endowment plans are usually higher than pure life insurance policies like term plans. This is because endowment plans combine insurance coverage with a savings component. For individuals seeking only life coverage, this additional cost may not be justified.

3. Limited Flexibility

Endowment plans often have rigid structures, with fixed premium payment schedules and fixed policy terms. If your financial situation changes, such as a need to reduce premiums or adjust the policy term, you may find the lack of flexibility challenging.

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FAQs about Endowment Plan

What are the tax benefits of endowment plans?

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The premium paid towards the endowment policy is tax-exempt under Section 80C, and the returns are tax-free under Section 10 (10D).

What are the additional bonuses with endowment plans?

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The additional bonuses on Endowment Plans are offered as a certain percentage of the sum assured. These are majorly of two types:

  • Guaranteed Yearly Additions
  • Guaranteed Loyalty Additions

How many times can I change the nominee in my endowment plan?

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The nominee is the person eligible to receive the Death Benefit in case the policyholder dies. They are usually the close ones and the ones directly affected by the policyholder's death. 

It is a crucial decision to select your nominee and hence should be taken with a lot of thought.

What are the common exclusions under endowment plans?

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Any claim originating from any of the below-mentioned situations comes under exclusions and is declined by the insurance company: 

  • Participation in any unlawful activity, including riots or civil disturbances.
  • Participation in high-risk sports and adventurous activities.
  • Being under the influence of drugs or alcohol. 
  • Self-harm or injury or an attempt to do so.

What is an endowment plan?

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An endowment plan is a type of life insurance that combines both a savings and an insurance component. It provides financial protection to your loved ones in case of your death and also accumulates a lump sum amount over time if you survive the policy term. The plan typically offers a guaranteed payout and potential bonuses, making it a blend of investment and insurance.

What is the endowment benefit?

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The endowment benefit is the payout at the end of the policy term. If the policyholder survives, they receive the sum assured plus bonuses. If they pass away during the term, the beneficiaries get the sum assured and bonuses. This feature combines financial protection with savings growth.

Is it good to invest in an endowment plan?

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An endowment plan can be a good choice if you want both insurance coverage and a savings component. It offers financial protection and helps build a lump sum over time, but typically has lower returns compared to market-linked investments.

What happens if I stop paying premiums?

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If you stop paying premiums, your endowment plan may lapse or become inactive. This could result in loss of coverage and reduced benefits. Some plans offer a grace period or allow you to access the policy's surrender value, but it's important to check your policy terms.

Is the maturity amount guaranteed in an endowment life insurance policy?

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The maturity amount in an endowment life insurance policy typically includes a guaranteed sum assured. However, any additional bonuses or extra benefits added to the policy depend on the insurer’s overall performance and may vary. These bonuses are not guaranteed and are based on the insurer's investment returns and financial stability.

What is an example of an endowment policy?

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To understand how an endowment policy works, let’s take the example of Rahul. At age 30, Rahul buys a 20-year endowment policy with a sum assured of ₹10 lakh, paying an annual premium of ₹30,000. If Rahul survives the policy term, he will receive ₹10 lakh plus any accumulated bonuses. If he passes away during the term, his beneficiaries will get the sum assured along with the bonuses.

How does an endowment policy work?

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An endowment policy combines life insurance with savings. You pay regular premiums, and if you survive the term, you get a lump sum with the sum assured and bonuses. If you pass away during the term, your beneficiaries receive the sum assured and bonuses. This offers both financial security and a savings component.

What is the difference between ULIP and an endowment plan?

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To see how ULIPs and endowment plans differ, imagine ULIPs as investment products tied to market performance, which means returns can fluctuate. Endowment plans, however, offer more stable returns with a guaranteed sum assured and additional bonuses.

What is the age limit for an endowment policy?

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The age limit for an endowment policy typically ranges from 18 to 65 years, but it can vary depending on the insurer and the specific plan. It’s best to check with the insurance provider for precise age limits.

Are endowment plans taxable?

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Endowment plans offer tax benefits under Section 80C of the Income Tax Act for premiums paid. However, the maturity benefit is tax-free under Section 10(10D), provided the policy meets certain conditions. Always consult a tax advisor to understand the specific tax implications for your situation.

Can I cash in my endowment policy?

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Yes, you can cash in your endowment policy, but this is known as surrendering the policy. If you decide to do this before maturity, you’ll receive the surrender value, which might be lower than the total premiums paid, especially in the early years. Always review the terms and conditions related to surrendering to avoid unexpected financial loss.

What are the risks of an endowment?

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Endowment plans come with several risks. They often provide lower returns compared to market-linked investments. Premiums are generally higher due to the savings component, and there can be penalties if you surrender the policy early. Additionally, the fixed returns may not keep pace with inflation, potentially reducing the actual value of your savings.

How much income is needed for an endowment?

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The income needed for an endowment plan depends on the insurer and policy. Generally, you should budget for a premium that aligns with your income and goals, starting from a few thousand rupees annually. For exact figures, consult insurance providers or use online calculators based on your coverage and term.

When should one start an endowment?

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Starting an endowment plan early in life is ideal, as it allows for lower premiums and a longer investment period. The sooner you start, the more you can benefit from compounding returns and secure financial coverage over a longer term.

What is a marriage endowment plan?

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A Marriage Endowment Plan is designed to save for future marriage expenses, like a child’s wedding. It combines life insurance with savings, offering a lump sum payout at maturity or in the event of the policyholder's death. This plan provides both financial support for marriage and life coverage.

What is a pure endowment policy?

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A Pure Endowment Policy pays out a lump sum only if the policyholder survives the term, with no death benefits. It is a savings plan with a guaranteed sum assured at maturity, ideal for those focused on future savings rather than death coverage.

What is a limited payment endowment plan?

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A Limited Payment Endowment Plan lets you pay premiums for a set period, but coverage lasts longer. For example, you might pay for 10 years, but the policy provides benefits for up to 20 years. It combines the advantage of reduced payment duration with extended coverage.

What is an anticipated endowment assurance?

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An Anticipated Endowment Assurance is a type of endowment policy that pays out a lump sum before the end of the policy term if the policyholder is diagnosed with a critical illness or in other predefined situations. This type of plan provides financial support earlier than the maturity date in case of certain events, offering added flexibility and protection.

What is a 10 year endowment savings plan?

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A 10 Year Endowment Savings Plan is a policy that lasts for 10 years, blending life insurance with savings. It pays out a lump sum, including the guaranteed amount and possible bonuses, at the end of the term if you survive. If you pass away during the term, the beneficiaries receive the death benefit.

What is a guaranteed endowment plan?

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A Guaranteed Endowment Plan is a type of endowment policy where the insurer guarantees a specific payout at the end of the policy term. This payout includes the sum assured and any bonuses or additional benefits accrued over the term. The guarantee ensures that you receive a predetermined amount, regardless of the insurer's performance, providing financial security and predictable returns.

What is a with profits endowment policy?

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A With Profits Endowment Policy provides life insurance with the chance for extra returns based on the insurer’s investment performance. Premiums are pooled and invested in various assets, generating bonuses added to the guaranteed sum. At maturity or in the event of death, the policy pays out the sum assured plus accumulated bonuses, blending guaranteed and potential extra returns.

What is an education endowment plan?

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An Education Endowment Plan helps save for future educational expenses. It combines life insurance with savings, providing a lump sum for education upon maturity or a payout to beneficiaries if the policyholder passes away early.

What is a limited endowment plan?

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A Limited Endowment Plan allows you to pay premiums for a set number of years while still enjoying coverage for a longer term. After completing the premium payments, the policy continues to provide benefits until maturity.

What is a joint life endowment plan?

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A Joint Life Endowment Plan covers two lives under a single policy. It benefits the surviving partner if one life insured passes away during the policy term and pays out the maturity benefit if both survive the term.

What is endowment mortgage insurance?

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Endowment Mortgage Insurance is a type of insurance where the policyholder's premiums are used to pay off a mortgage if they pass away or become disabled. It combines life insurance with a savings component to cover the mortgage balance and protect the policyholder’s home.

What is a retirement endowment plan?

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A Retirement Endowment Plan is a type of insurance policy designed to provide financial support during retirement. It combines life insurance coverage with a savings component, where premiums are paid over a specified period. At retirement, the policy pays out a lump sum or regular income to help cover living expenses. This plan helps build a corpus for retirement while offering life coverage in the interim.

What is an endowment assurance policy?

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An Endowment Assurance Policy combines life insurance with a savings component. If the policyholder survives the term, it offers a lump sum payment at maturity, including the sum assured and bonuses. If the policyholder dies during the term, the beneficiaries receive the sum assured. This policy provides both financial protection and savings growth.

What is a double endowment policy?

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A Double Endowment Policy offers double the sum assured if the policyholder survives the policy term or a standard death benefit if they pass away before the term ends. It provides a higher payout upon maturity compared to regular endowment policies.

What is a participating endowment policy?

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A Participating Endowment Policy allows policyholders to receive a share of the insurer's profits and the guaranteed sum assured. This is typically provided through bonuses added to the policy, enhancing the overall benefit upon maturity or in case of death.

What is a non-participating endowment plan?

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A Non-Participating Endowment Plan does not offer policyholders a share in the insurer's profits. It provides a guaranteed sum assured and any applicable bonuses as predetermined by the policy but does not include additional profit-sharing benefits.

Can an endowment life insurance policy in India be surrendered before maturity?

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Yes, an endowment life insurance policy in India can be surrendered before maturity. If you choose to do so, you'll receive a surrender value, which is typically lower than the total premiums paid and depends on the policy's terms and duration.

What are the disadvantages of an endowment policy?

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Endowment policies have some drawbacks, including lower returns compared to market-linked options, higher premiums due to their combined insurance and savings features, limited flexibility in terms and payments, penalties for early surrender, and a long-term commitment of 10-30 years.

What are the benefits of a traditional endowment plan?

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Benefits include a guaranteed sum assured, maturity benefits, death benefits, and sometimes bonuses. It also encourages disciplined savings over the long term.

How does the critical illness cover benefit the policyholder?

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It provides a lump sum amount upon diagnosis of a covered critical illness, which can be used for medical expenses, recovery, or any other financial needs.

What is the main difference between an endowment plan and a term plan?

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An Endowment Plan combines insurance with savings and provides a maturity benefit, while a Term Plan offers pure life insurance coverage without any savings component or maturity benefit.

What happens when an endowment policy matures?

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When an endowment policy matures, you receive the maturity benefit, which includes the guaranteed sum assured and any accumulated bonuses. This payout is provided if the policyholder survives the policy term, offering a lump sum that can be used for various financial needs.

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