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Endowment Policy

About Endowment Policy
Endowment plans are life insurance policies that not only covers the insured’s life in case of an unfortunate event, but also offer a lump sum amount known as “maturity benefits” at the end of term. ‘Maturity’ here means after a specific period of time. Insurance company pays the assured sum to policy holder or to his nominee/legal heirs either at end of policy period or upon untimely death of the insured before policy period.

This policy is a combination of insurance and investment. This is a risk-free investment as it has a pool of savings after maturity of the policy which can either be reinvested or spend post-retirement. The assured sum can also be utilized for monthly expenses, children’s education or wedding or even for a vacation.

Advantages of Endowment Policy
Maturity benefitGoal based savingsDeath benefitTax benefitsLoanBonus
The substantial amount that is received at end of term when the policy matures.
This is a disciplined approach to save money as the insured are expected to set a predetermined amount as premium for a specified time interval.
This is equal to life insurance policy cover where the insured’ nominee or legal heirs get the assured sum when they claim for it in case of policy holders’ untimely death during the policy period .
According to the Income Tax Act of India, premiums paid by policy holder can help them reduce their taxable income.
In case of emergency, the insured can obtain loan against the policy without having to secure the loan amount against a guarantee.
Endowment plans declare a bonus every year that is given out as a certain percentage of the sum assured.
Types of Endowment Policies

There are many different types of endowment policies available, which are as follows:

Pure Endowment PolicyOrdinary Endowment PolicyJoint life Endowment PolicyDouble Endowment PolicyFixed term Endowment PolicyEducational Annuity PlanMoney back policyMarriage Endowment Policy
In this the insured or his nominee / legal heirs gets the specified sum on his death or on maturity of the policy whichever is earlier.
It is a combination of pure and term endowment which is given for a specified term of years. The assured sum is payable on death or on its maturity.
This policy covers more than one life under a single policy and the sum assured is payable on the policy maturity or on untimely death of any one of the policy holders during the endowment period.
In this policy, if the insured dies during policy period, basic sum assured is payable to their nominees and if policy holder survives the period double the sum assured is paid.
Under this policy, sum assured is payable only at end of specified period, if death of insured occurs premium ceases and policy becomes fully paid.
In this policy, the sum assured is payable in equal instalments for 5 years and not in lump sum amount.
n case of event of death during policy period, the sum assured is payable without any deduction.
This provides fund for marriage of children. If the child dies during the tenure the insured can substitute name of another child as beneficiary.