An endowment policy is essentially a life insurance policy which, apart from covering the life of the insured, helps the policyholder save regularly over a specific period of time so that he/she is able to get a lump sum amount on the policy maturity in case he/she survives the policy term. This maturity amount can be used to meet various financial needs such as funding one’s retirement.
Who should consider buying endowment policies?
According to experts, people with a regular stream of income and need for a lump sum amount after a period of time may consider buying an endowment plan.
“Endowment plans provide a disciplined route for savings, which could come in handy in case of a financial emergency. Salaried people, small businessmen and professionals such as doctors and lawyers should look at this plan to meet their long-term financial plan.
Being a savings-oriented life insurance plan, most of the endowment policies in the market provide guaranteed returns for policyholders along with additional bonuses. The savings portion of the money invested in an endowment policy is invested in bonds and other securities to generate returns. Endowment policies are ideal for investors who prefer risk-free, long-term investments. Most of the top insurers in the market have endowment plans in their product lineup. The benefits and returns may vary from one policy to another. If you are looking for an endowment policy to invest, you need to do quick research about the products available in the market and pick the best one suitable for you.
Why do you need an Endowment Policy?
The sum assured offered by a term insurance policy is paid only if the insured person dies within the policy term. However, this is not the case with an endowment policy. A plan that gives you both maturity benefits and death benefits is better in case you outlive the policy. An endowment policy not only helps your family in case of your demise, but also helps you take care of large expenses that come later in life, such as education of children or grandchildren, children’s wedding, medical procedures, retirement needs, buying a house, etc.