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Investment Plans 383 views October 14, 2021
An endowment insurance plan provides you with life cover along with the benefit of savings. With an endowment plan, you’ll get a maturity benefit at the end of the policy term which helps fulfill your financial needs. But, why should you go for an endowment plan when there are so many other insurance options available for you? Because it helps you balance your financial security as well as your family care. So, in case of your demise during the policy term, your family stays financially strong. In an endowment plan, you can also customize your coverage as per your need. Read this page further and learn more about endowment insurance plans.
Table of Contents
Types of Endowment Insurance Plans
There are two types of endowment plans –
With Profit
Here, the insured receives a guaranteed sum assured as specified at inception along with the accrued bonuses declared by the company. The benefit payable under the policy shall be more than the basic sum assured due to the incurred bonuses.
Non Profit
No, bonuses are declared by the company in this type of endowment plan, and a guaranteed sum assured shall be payable to the insured in the event of death or maturity of the policy, whichever is earlier.
Features & Benefits of Endowment Insurance Plans
Buying an endowment plan ensure you the following benefits during the policy term –
Maturity Benefit
The insurance company shall pay an amount equal to the sum assured plus bonuses, if any, upon your survival till the end of the policy term.
Death Benefit
Your family shall receive an amount equal to the sum assured plus bonuses, if any, in case of your death during the policy term.
Bonuses
If you have purchased a with-profit endowment plan, you’ll be eligible for bonuses declared by the company. The company declares bonuses after a specific period during the policy term, and they shall accrue till the end of the term. In case of your death or maturity of the policy, whichever is earlier, you’ll receive these bonuses.
Rider Options
You can customize your endowment plan with the following riders –
- Accidental Death and Disability Rider
- Critical Illness Rider
- Hospital Cash Rider
- Waiver of Premium Rider
- Accidental Death Benefit Rider
Note – The rider option may vary from insurer to insurer.
Tax Benefits
As per tax laws, an endowment plan can offer you tax benefits under Section 80C and 10(10D) of the Income Tax Act, 1961. You can also consult your tax advisor for details.
Loan Option
If your endowment insurance plan has acquired a surrender value, you can use it to borrow a loan as per your financial need. An endowment plan shall acquire the surrender value based on your chosen premium payment term. In the case of single pay, the policy acquires surrender value in the first year. Whereas, in limited or regular pay, the surrender value shall acquire after paying the premium spotlessly for 2-3 years. You can borrow a loan up to 80-90% of the surrender value of the endowment plan.
How to Choose an Endowment Insurance Plan?
You can compare endowment insurance plans on the following factors and choose the best one for yourself –
Premium Amount
The first thing you need to compare is the premium amount. Because you need an affordable plan that comes within your budget and fulfills your needs. So, search for the best endowment plans and compare their premium offer and choose the one with the least premium amount.
Policy Term & Premium Payment Options
You should check the coverage term of the endowment plan and see how you can pay premiums for it. There are three types of premium payment terms available to you –
Single Pay – Here, you need to pay the premium in a one-time lump sum amount. After that, no further premiums shall be charged.
Limited Pay – If you choose the limited pay option, you need to pay premiums for a certain period less than the policy term in installments.
Regular Pay – Your premium payment term shall be equal to your policy term and you need to pay the premium till the end of the term.
If you choose the option of limited or regular pay, you can pay a premium –
- Yearly
- Half-yearly
- Quarterly
- Monthly
Sum Assured
Check out the coverage amount the insurer offers you in an endowment plan and see whether it will be enough for your family or not.
Have a look at some of the popular endowment plans and compare their offers –
| Plan | Sum Assured (IN INR) | Maturity Benefit | Death Benefit | Policy Term (In Years) | Premium Paying Term (IN Years) |
|---|---|---|---|---|---|
| LIC Jeevan Lakshya Plan | 1 Lakh and above in multiples of INR 10,000 | Sum of 110% of the Basic Sum Assured + vested Simple Reversionary Bonuses and Final Additional Bonus shall be payable on the date of maturity | 10% of Sum Assured shall be payable to the nominee every year till one year before the maturity date. | 13 to 25 | Policy Term - 3 |
| Bharti AXA Life Guaranteed Income Pro | Minimum 25,000 and maximum subject to the board approved underwriting | Sum Assured on Maturity plus the Guaranteed Additions | For Single Pay the highest of the following – 1.25X Single Premium (if Single Premium < INR 50,000) 10X Single Premium (if Single Premium is >=.50,000) 105% of Total Paid Premiums Absolute Amount = Sum Assured For Limited Pay the highest of the following – 11X Annualized Premium 105% of Total Paid Premiums Absolute Amount = Sum Assured | 10, 12, 14, 15, 16, 20, 22, 24 | 1, 5, 6, 7, 8, 10, 11, 12 |
| HDFC Vision Endowment Plus Plan | 1 Lakh to 8 Lakh + | Maturity Sum Assured plus accrued regular bonuses and terminal bonus (if any) | Sum Assured on Death; plus accrued regular bonuses and terminal bonus (if any) | 10 to 40 | 7, 10, 15, 20 and regular pay |
| Canara HSBC OBC Jeevan Nivesh Plan | Minimum sum assured 3 Lakh for annual mode | Guaranteed Sum Assured on Maturity along with accrued Annual bonuses and Final bonus, if any | The highest of the following shall be payable - 10 times the Annualised Premium Guaranteed Sum Assured on Maturity Absolute amount assured to be paid on death | 10, 15, 20, 25, 30 | 5, 7, 10, regular pay |
Note – Under LIC Jeevan Lakshya Plan, if the life assured dies during the policy term, the maturity benefit as specified above shall be payable to the nominee.
How to Apply for an Endowment Insurance Plan?
To buy an endowment plan, visit Wishpolicy, a neutral online financial marketplace wherein you’ll get a wide range of options to compare. To apply for insurance, follow the steps shown below –
- Visit the official website of Wishpolicy
- Click on the ‘Investment Plan’ option
- Select your gender
- Enter your name, mobile number, investment amount and age
- Click on the ‘Start Investing’ button
List of Documents Required to Apply for an Endowment Plan
You need to submit the following documents to apply for an endowment plan –
- ID proof, such as Aadhaar Card, Voter ID Card, PAN Card, etc.
- Address proof, such as Passport Copy, Electricity Bill, etc.
- Duly filled application form
- Passport size photograph