An endowment policy is an insurance plan that provides guaranteed benefits in the form of the total sum assured with many other bonuses to its policyholders when it matures or if the policyholder dies during the policy term. Endowment plans are a type of insurance instrument wherein added advantages of savings are provided to the investor. In this way, an endowment plan not only offers the benefit of sum assured to the nominee when the policyholder dies before the policy matures and as well offers the policyholder to get the benefits of maturity bonuses when he/she survives the term of the policy.
Most of the endowment plans come with two options – 'with profit' and 'without profit'. An endowment plan that is profit-oriented comes with many terminal and revisionary advantages that add to the actual sum assured on the plan's maturity and hence provide add-on fund benefits. A non-profit oriented endowment plan does not provide such benefits and hence can be considered as a traditional plan of life insurance. On the other hand, an endowment plan offers lump-sum pay-out and hence encompasses the maturity benefits and benefits of the main plan, which is the sum assured. This means that the policyholder can get the pay-out upon maturity of the plan and as well provides the option to further investment of the funds as and when needed.
So, one can purchase an endowment plan as per his/her requirements and according to his/her financial goals and there are no pre-fixed or rigid rules related to the term of the policy.
One should know the below five things before buying an endowment plan:
Final Words: These are the top five things that one should know before purchasing any endowment plan. Most investment plans that come under the endowment category offer extensive financial coverage and ensure that there are economical terms and conditions applied for the coverage they offer. So, if you want to purchase a term plan with maturity benefits, opting for an endowment policy is recommended.