Is Endowment Policy The Right Choice For You?

Most fundamental financial goals and needs can be classified into two categories – insurance and wealth building. Depending on the means you have and the goals you wish to achieve, you may opt for a host of plans to suit your needs. However, people who look to keep things simpler may want a single policy to address most of their needs, if not all. For such consumers, endowment plans may be the right choice. Let’s understand what an endowment plan is, and who should get one.

What are Endowment Plans?

Life insurance policies that offer guaranteed returns upon maturity, and can thus be used to create a corpus, are known as endowment plans. These plans offer a life cover so you may safeguard your loved ones and their future. If the life insured survives that policy term duration, then the policyholder can expect a lump sum return as predefined by the policy.

When and Why Should You Buy An Endowment Plan?

An endowment plan, often also known as a savings plan, can be chosen to fulfil a variety of purposes. Most of these offer long-term returns, and can thus be suitable to fulfil long-term goals, such as child education or retirement.

If you are in a phase of life where your responsibilities are growing and your role is turning into that of a provider for your loved ones, then endowment plans may be right for your needs.

The first aspect to consider with endowment plans is the life cover aspect. If you want to live a life where you are able to enjoy your present moment with your loved ones, instead of worrying about the future, you should get life insurance. It allows you to ensure that, irrespective of how tomorrow looks, your loved ones will be taken care of. Endowment plans offer security with a life cover.

The second aspect to consider with endowment policies is the returns on plan maturity. Also known as guaranteed returns plans, these policies are an apt option if you are looking to create savings for any of your long-term goals. Using an endowment plan calculator, you may get an idea of what returns you can expect for the premiums you are willing to pay.

Thus, anyone who seeks life insurance plus guaranteed returns from a single plan can opt for endowment plans. Since these are available for varying durations, you may buy them at any time, after assessing your goals and needs.

Tips Before You Buy

Here are a few things to consider when buying a savings plan online or offline.

  • It is advisable to start early. Some endowment plans may allow you to buy the policy for a duration of five, ten, or 15 years. However, the returns tend to be relatively higher when the policy is maintained for a longer duration. Sum assured for the life cover also tends to be higher when the life assured is younger.
  • Research your options well. There are a variety of guaranteed returns plans online and offline that you may choose from. However, some may offer the features you like, that others may not. Understand your needs and choose accordingly.
  • Use an endowment plan calculator. There are several calculators available online. These can be a useful tool when comparing savings plans online.

Endowment plans are a way to achieve dual benefits in a single plan. Since most of these plans are not market-linked, you can rest assured about your financial future, as well as that of your family.

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