Endowment Policy – Definition, How it Works, Riders, Best Plans, Features, Benefits, Best Quotes | Buy and Renew Online

What is an Endowment Plan?

An Endowment Plan is a type of Life Insurance Plan which provides a Life Cover as well as a Maturity Benefit. The Plan combines the benefits of both Insurance and Investment. An Endowment Plan provides a Maturity Benefit in case the Policyholder survives the Policy Term and a Death Benefit in case the Policyholder dies during the Policy Term. The returns from an Endowment Plan can be used to meet your goals such as funding your child’s education, travel expenses etc.

How does an Endowment Plan Work?

An Endowment Plan offers regular payouts to the Policyholder during the Policy Term. In addition, the Policy also offers a lumpsum payout to the nominee in case of the Assured’s death. The working of an Endowment Plan is explained below

1. Premium Payment: The Policyholder makes regular premium payments during the Policy Period. The Premiums can be paid monthly, quarterly, semi-annually or even annually.
2. Investment: A portion of your premium goes towards investment and growing your corpus while the other portion goes towards providing Insurance Coverage.
3. Maturity Benefit: The Policyholder receives a Maturity Benefit in the form of a lumpsum amount at the end of the Policy Term.
4. Death Benefit: In case the Policyholder dies during the Policy Period, the nominee receives the entire Sum Assured even though the Assured has received Survival Benefits during the Policy Term.

What are the different types of Endowment Plans available in India?

The different types of Endowment Plans available in India are as follows:

1. Unit Linked Endowment Plan: A Unit Linked Endowment Plan is a combination of Insurance and Investment Plan. A part of the premium amount is invested in the market to generate returns for the Policyholder while the other part of the Premium is used to offer Insurance Coverage. The Policyholder is given the choice to select the funds to invest in, depending on his risk appetite.
2. Endowment with Full Profits: An Endowment Plan with Full Profits invests a portion of Premiums. This invested portion of Premiums accumulates bonuses which are added to the Sum Assured and paid out as an Assured Amount on the Policy Maturity or Death of the Policyholder.
3. Low-Cost Endowment Plans: Low-Cost Endowment Plans allow you to save and accumulate funds to fulfill a future requirement such as buying a house, repaying a loan etc. The Premiums are lower than a traditional Endowment Plan, making them an affordable option.
4. Non-Profit Endowment: A Non-Profit Endowment Policy guarantees a fixed amount on Maturity of the Policy without any additional bonuses. The Policyholder received the Sum Assured on Policy Maturity or a Death Benefit in case of the Policyholder’s demise.
5. Guaranteed Policy: A Guaranteed Policy ensures that the Policy pays fixed amount on maturity or on the demise of the Policyholder irrespective of the returns generated by the Insurance Company.

What are the different riders available in Endowment Plans?

1. Accidental Death Rider: The Accidental Death Benefit Rider offers additional Sum Assured as a Death Benefit if the Policyholder’s dies due to an accident.
2. Critical Illness Cover: The Critical Illness Rider offers an additional Lumpsum Amount if the Policyholder is diagnosed with any of the critical illnesses mentioned in the Insurance Policy.
3. Terminal Illness Rider: The Terminal Illness Rider accelerates the Death Benefit Payout in case the Policyholder is diagnosed with a Terminal Illness.
4. Waiver of Premium Rider: A Waiver of Premium Rider waives off the Insurance Policy Premiums in case the Policyholder suffers from any Critical Illness or Disablement.

What are the Best Endowment Plans in India?

Bajaj Allianz Life ACE Plan

Bajaj Allianz Life ACE is an endowment Plan from Bajaj Allianz Life Insurance Company offering a life cover to secure your family as well as an Investment Benefit to meet your life goals.

Key Features of Bajaj Allianz Life Ace Plan

1. Death Benefit: Death Benefit/Insurance Coverage available upto 100 years of Age
2. Flexible Benefits: You can choose if you want an Income or a Lumpsum Benefit or both
3. Minimum Entry Age: 0 to 60 Years
4. Maximum Entry Age: Upto 100 Years
5. Choice of Income: You have various options to receive income. You can choose to receive Income after the first month or after a fixed period based on your requirement. Additionally, you can choose if you want a level income or an increasing income. Finally, you can also choose if you want an income for a limited term or upto 100 years of age
6. Premium Payment Term: You can choose the Premium Payment Terms and pay premium for 5, 6, 7, 8, 9, 10 and 12 years

ICICI Pru Savings Suraksha Endowment Plan

ICICI Pru Savings Suraksha Endowment Plan is an endowment Plan from ICICI Prudential Life Insurance Company offering a life cover to secure your family as well as an Investment Benefit to meet your life goals.

Key Features of ICICI Pru Savings Suraksha Endowment Plan

1. Death Benefit: Death Benefit provided for the entire Policy Term
2. Minimum Entry Age: 0 Years
3. Maximum Entry Age: 50 Years
4. Maximum Maturity Age: 18 to 70 Years
5. Maturity Benefit paid on Policy Maturity equal to Guaranteed Maturity Benefit + Accrued Guaranteed Additions + Vested Reversionary Bonuses + Terminal Bonus
6. Premium Payment Term: You can choose the Premium Payment Terms and pay premium for 5, 7, 10 and 12 years
7. Minimum Premium of Rs30,000 per annum

Kotak Guaranteed Fortune Builder

Kotak Guaranteed Fortune Builder is an endowment Plan from Kotak Life Insurance Company which provides guaranteed benefits to fulfil the objective of wealth creation as well as receiving income for short term or long-term goals or secure your child’s future with guaranteed payouts.

Key Features of Kotak Guaranteed Fortune Builder

1. Death Benefit: Death Benefit under all options is payable in case of death of Life Insured during the Policy Term
2. Long Term Income Option: The Plan provides a Long-Term Income Option to receive income for a Period of 15, 20 or 25 Years
3. Option to receive Early Income during Policy Term and Guaranteed Income at the end of the Policy Term
4. The Assured Wealth Option of the Plan pays Guaranteed Yearly Additions accruing annually during the premium payment term on the accumulated premiums paid.
5. Maturity Benefit payable on Policy Maturity as Guaranteed Income payouts as per the Income Benefit and frequency of the payout opted by the Policyholder.
6. Minimum Premium of Rs30,000 per annum

LIC New Endowment Plan

LIC’s New Endowment Plan is a participating, Non-Linked, Life, Individual, Savings plan which offers an attractive combination of protection and savings. This Plan provides financial security for the family members of the deceased any time before Policy Maturity and a lumpsum benefit at Policy maturity for the surviving policyholder.

Key Features of LIC New Endowment Plan

1. Death Benefit: Death Benefit is payable in case of death of Life Assured during the Policy Term. Death Benefit is equal to “Sum Assured on Death” along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any.
2. Maturity Benefit: The Policyholder receives a Survival Benefit if the Life Assured survives the Policy Term. Maturity Benefit is equal to “Sum Assured on Death” along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any.
3. The Policy also participates in the profits of the Corporation and is entitled to receive Simple Reversionary Bonuses declared as per the experience of the Company.
4. LIC New Endowment Plan provides various riders such as Waiver of Premium, Accidental Death Benefit and Term Assurance Rider to enhance Policy Benefits.

What are the Key Features of Endowment Plans?

Endowment Plans offer the following features

1. Investment and Insurance Coverage: Endowment plans provide both Life Insurance Coverage and an Investment component, making it a comprehensive financial product.
2. Maturity Benefit: An Endowment Plan pays a lumpsum amount to the policyholder, which includes the Sum Assured and any Accrued Bonuses upon Policy Maturity.
3. Death Benefit: The Policyholder’s nominee receives the Sum Assured in the event of the policyholder’s demise, thus offering financial security.
4. Flexible Premium Payment Options: Policyholders can choose from various premium payment modes such as monthly, quarterly, half-yearly, or annually.
5. Loan Option: You can take out a loan against your endowment policy, thus offering liquidity benefits.
6. Tax Benefits: Premiums paid toward endowment plans are eligible for tax deductions under Section 80C of the Income Tax Act, and the maturity proceeds may also be tax-free under Section 10(10D).
7. Riders: You can add various riders to Endowment Plans like Critical Illness Rider, Waiver of Premium Rider to enhance Policy benefits.
8. Bonuses: Many Endowment Plans offer Bonuses declared by the Insurance Company, which are added to the policy benefits and paid out on maturity or death.

What are the Benefits of Endowment Plans?

1. Bonuses: Insurance Companies declare Bonuses on With-Profit/Participating Policies where the Insurance Company distributes surplus funds after payment of expenses and claims. Insurance Companies declare the following types of bonuses
   • Reversionary Bonus: A Reversionary Bonus is an annual bonus which is added to your Policy’s Sum Assured. The Bonus is permanent and cannot be withdrawn if the Policy runs to maturity or if the Policyholder dies
   • Terminal Bonuses: A Terminal Bonus is a one-time bonus declared at the time of Policy Maturity.
2. Disciplined Savings: An Endowment Plan encourages disciplined savings by requiring Regular Premium Payments.
3. Death Benefits: Endowment Plans offer Insurance coverage where they pay a lumpsum benefit to the Beneficiary in case of the Assured’s demise.
4. Maturity Benefit: An Endowment Policy offers Maturity Benefits where the Policy pays a Lumpsum amount if the Assured survives the Policy Term.
5. Tax Benefits: Premiums paid towards an Endowment Policy are eligible for tax benefits under section 80C and 10(10D) of the Income Tax Act, 1961.

What are the factors to consider before you purchase an Endowment Plan?

You need to consider the following factors before purchasing a Money Back Policy:

1. Evaluate Your Goals: An Endowment Plan is more suited to build a corpus for your long-term financial goals. This it is important to understand your financial needs, whether it is saving for your child’s education, retirement, or other goals.
2. Riders: You should carefully consider the various riders available in Endowment Policy which enhance Policy Benefits to ensure that you are comprehensively covered.
3. Review Premium Commitments: You must compare the Policy Premiums between different Insurance Companies to get the best quotes
4. Claim Settlement Ratio: You should compare the claim settlement ratio of various Life Insurance Companies to judge their effectiveness in settling claims.

What is the Difference between an Endowment Plan and a Money Back Policy?

The main difference between an Endowment Plan and a Money Back Policy is that an Endowment Plan offers a lumpsum amount on Policy Maturity while a Money Back Policy offers Periodic Payouts during the Policy Term alongwith lumpsum amount on Policy Maturity The other differences between a Money Back Policy and a Fixed Deposit are mentioned below:

What is the Eligibility Criteria to purchase an Endowment Plan?

1. Entry Age: Endowment Plans specify the Minimum and Maximum Entry age within which you can buy the Policy.
2. Maturity Age: Endowment Plans also specify the Maturity Age, which is the maximum age until which the coverage is provided. Whole Life Endowment Plans provide coverage till 99 or 100 years of age.
3. Policy Term and Premium Payment Term: Endowment Plans specify the Policy Term, which is the time period for which the coverage is provided. The Plan also specifies the Premium Payment Term which is the time period for which the Policyholder has to make Premium payments.

What are the documents required to purchase an Endowment Plan?

We need to provide the following documents to purchase an Endowment Plan:

1. Valid ID Proof such as PAN Card, Aadhaar Card etc
2. Proof of Address such as Driving License, Aadhaar Card etc
3. Duly filled Application Form
4. Income Proofs etc.

What is the Claim Process for an Endowment Plan?

The process to make a death Claim for an Endowment Plan is as follows:

1. Inform the Insurance Company as soon as possible about the death of the Policyholder
2. Submit the Duly Filled Claim Form to the Insurance Company along with the Death Certificate
3. Provide the Bank Details to receive the death Benefit

What are the documents required to make a claim under an Endowment Plan?

You need to provide the following documents to purchase an Endowment Plan:

1. Claim Form
2. Policy Certificate
3. Death Certificate
4. Medical Reports
5. Post Mortem Reports
6. Cancelled Cheque

What are the Tax Implications of an Endowment Plan?

The Tax Benefits of an Endowment Plan are as follows:

1. Section 80C: Premiums paid towards an Endowment Plan are eligible for tax deduction under Section 80C of Income Tax Act, 1961
2. Section 10 (10D): The Maturity Benefit and the Death Benefit received from an Endowment Plan are eligible for tax exemption under Section 10(10D) of Income Tax Act, 1961

Get Best Quotes for your Endowment Plan with Qian Insurance!

Endowment Policies combine the benefit of Insurance along with Investment in a single plan, which makes it an attractive option for many. However, the Premiums of Endowment Policies are higher than Traditional Term Insurance Policies. This it is important to compare the pros and cons of purchasing an Endowment Policy. If you wish to know more about Endowment Plan, you can you can email us at insurance@qian.co.in or call us on 022-35134695. We would be glad to assist you.