What is Endowment Policy?
Word endowment means funding or financing or subsidizing. Thus endowment policies are also known as term insurance policies which finance your family upon your death or which offers sum assured plus bonuses to you if you remain alive throughout policy period. These kinds of policies guarantee secured future of your family if you die early and enjoyable future of you if you live until the insurance policy matures. There are basically two main types of this policy:
1. Non-profit based endowment policy and
2. Profit based endowment policy. Non-profit based endowment policy offers the nominee only the sum assured amount upon death of policyholder whereas profit based endowment policy offers sum assured plus bonus for the number of years policy was in force if you remain alive until policy matures.
When and Why to buy Endowment Policies?
If you are an individual having regular flow of earnings and wish lump sum after a certain period time, you must go for endowment policy. It allows building a corpus helping your dependent in case of financial crisis. If you are only interested in life cover and not in saving then you must go for term insurance over endowment.
One should buy endowment policy if:
- You wish to protect you dependents and family financially.
- You are planning to build corpus to fulfill your investment objectives for a long term.
- To make sure about goal-oriented savings
You can also add beneficiary riders like Accidental Death Benefit, Total / Partial Disability Benefit, Critical Illness benefit etc. to add more value to your policy.
Special Features of Endowment Policy
Traditional saving plans results in low or no returns over your investments. With endowment plans, it adds benefits to your saving allowing your money to grow. Various forms of bonuses as per the products are available like Revolutionary Bonus, Terminal Bonus etc.
Develop habit of regular and disciplined saving to enjoy financial security ensuring dreams and goals of your family remain secure. Let your family continue the lavish lifestyle for which you worked day & night even in your absence.
If the policyholder dies before maturity of the policy, his/her family members or nominated individuals receives fixed amount as Sum Assured. But if the policyholder lives longer i.e. more than the maturity period of plan, he/she enjoys maturity amount comprises of Sum Assured + Bonuses.
