Endowment schemes or plans are basically life insurance policies that include a savings component as well as a chunk of money on its maturity. Such policies are used to insure the life of an individual, but also offer the benefits of return in considerable amounts depending on how much the insured saves over a certain period of time. This return amount is available to the one who holds the policy after the policy has reached its full term or maturity.
The amount of money that people receive on maturity of endowment plans is extremely significant since many people plan their finances in advance, depending on the term or duration of such endowment policies.
The chief advantages of investing in an endowment policy are the financial security of family members, tax exemption from salary as well as target-oriented savings.
Why should you need to buy endowment plans?
Endowment plans are most suitable for those who are regularly salaried and might need a certain chunk of money after a specific span of time. Since this is one of the best investment plans that come free of any financial risks, many people find these plans suitable.
- Endowment policies offer a streamlined method of saving money for fulfilling a certain financial goal in the future.
- An additional advantage of such policies is the live-coverage for the insured. The family of the insured will still be financially secure if some misfortune happens to strike and the principal earner of the family can no longer earn money.
- The investment is totally risk-free and assures the policyholder with a guaranteed return of a sum of money when the term or duration of the policy is reached i.e. the policy gains its maturity.
- The policyholder can also avail various benefits and exemptions from taxes, based on the returns from the maturity of endowment policies. Of course, the rate of returns is lower as compared to some other investment schemes, but the guarantee of return and risk-free nature is what makes these schemes so popular.
What to look for while buying the best endowment plan?
Since there is a wide range of endowment policies just like life insurance schemes, it is important for you to understand what your exact requirements are. That will help you in selecting the best plan for your needs. In order to find the perfectly suitable plan, you must keep the following factors in mind:
- Check the rates of premium that the policies offer
- Check the track record of the insurance company in settling returns on investment
- Pick a plan who terms and conditions you can easily understand. Policies with complicated terms usually come with catches which people tend to miss out from the fine print.
- Make sure that the record of customer service is impressive so that the overall process is smooth and convenient for you
Owing to their dual benefits of life insurance as well as a savings plan, endowment investment schemes are a very popular form of investment that is quite popular among people to serve their goal-oriented savings plans.