The market is cluttered with numerous life insurance policies, furthermore bifurcated in different types such as term insurance, whole life policies, ULIPs, child plans, pension plans, savings and investment plans, and endowment plans. When it comes to traditional life insurance policies that offer some cash value benefits, endowment plans are considered to be apt for most of the financial needs. Here, you can get a hand over the advantages of endowment plans.
Endowment plans are nothing but the extended version of term life insurance. It offers you a provision for investment, and several bonuses accrued on the investments if the market performs well. The sum assured decided at the commencement is provided as the maturity benefit at the end of the policy term. Advantages of Endowment Plans They Are Less Risky As compared to other cash-value plans such as ULIPs or additional mutual funds, the endowment plans are comparatively less risky. In the case of the market doesn’t perform well, the maturity benefits are guaranteed. They Provide Financial Security The key feature of any life insurance is the financial protection in case of any unfortunate event. The death benefits paid by the insurer on the demise of the insured person play a crucial role, especially if the demised person is the sole breadwinner in the family. If the life insured survives the tenure, the corpus built over the period is helpful for another financial goal. They Offer Bonuses Based on the profits accrued over the period through the money invested in markets (if any), the insurance company may declare different bonuses. It is an additional amount offered to the policyholder apart from death and maturity benefits. The bonuses are paid in case of all the liabilities towards the insurer are settled. There are two types of bonuses, namely Reversionary Bonus and Terminal Bonus. Reversionary bonuses are declared at the end of every fiscal year, but the amount is handed over along with death/maturity benefits. Terminal bonuses are discretional, i.e. they are declared at the end of the tenure/ the event of demise. They Support Riders If found that endowment plans don’t cover a particular reason/event, you can opt for a rider, best suited for the reason you are concerned with. The accidental death benefit, physical disability etc. are a few riders you can opt for. Last but not the least, like all other life insurance policies, endowment plans also offer tax benefits under Section 80C and 10(10D) of the Income Tax Act. To conclude, endowment plans are advantageous in numerous ways, in terms of risk and benefits. Hence, opt for the best-suited one and make a wise decision.
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April 2022
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