What Are the Different Types of Endowment Plans?

How does an Endowment Life Insurance Plan Work?

Types of Endowment Life Insurance Policy

What Are the Benefits of an Endowment Plan?

FAQs about Types of Endowment Plan

What are the types of bonuses available in an endowment plan? up-arrow

There are generally two types of bonuses in an endowment plan:

  1. Reversionary Bonus: It refers to the bonus that gets added to the sum assured on maturity. This is the amount declared by the end of each year but is not payable until the term ends.
  2. Terminal Bonus: This is a type of added bonus that your insurance provider offers at the end of the policy term. It is paid from the profits made by the insurer from the investments. You will receive this amount along with the sum assured.

What are the two main differences between an endowment policy and a term insurance policy? up-arrow

The two main differences between term insurance plans and endowment plans are:

  • Returns: Endowment plans offer both guaranteed sums assured to the nominees called maturity benefit and also the Death Benefit. However, the term plan does not offer any maturity benefit.
  • Type of Payment: In an endowment plan, you will receive both sum assured along with the bonuses in a lump sum. However, in term insurance, you can either receive it in lump sums or monthly instalments. 

Will I receive tax benefits on endowment premium payments? up-arrow

Yes, under Section 80C of the Income Tax Act, 1961, you can avail tax deductions of up to ₹1.5 Lakhs from the premiums you pay each year. Moreover, you can also claim tax exemption on the maturity benefits as per Section 10(10D), subject to certain conditions.