Types of Endowment Life Insurance Policy

An endowment plan is an infamous life insurance policy available in India. It is considered the best saving option since the returns under the endowment plan are assured, which can be fruitful in meeting the financial goal. It is the most preferred choice if a policyholder does not wish to get stuck in ambiguous plans and wants to have guaranteed returns to meet the specific financial objective.

Read more
Best Investment Options
  • Save upto ₹46,800 in tax under Sec 80C

  • Inbuilt Life Cover

  • Tax Free Returns Unlike FD+

We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold
Get Guaranteed returns along with life cover
invest in 100% Guaranteed Return Plans Tax benefits under sec 80C & No Tax on returns+
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on ''View Plans'' you, agreed to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold

There are various plans that provide the policyholder with the opportunity to invest in the capital market. Hence, in these types of funds, the returns are uncertain and depend on the choice of schemes an investor selects. However, in an endowment plan, the policyholder gets the guarantee of returns on the investment made by him. 

Here is the list of endowment insurance examples in order to better comprehend the plan.

  1. Education of Child

    As stated earlier, the endowment plan is meant to meet the specific financial goal. Therefore, a policyholder may utilize the plan to complete a child's education. Nowadays, parents tend to send their children to foreign states to provide them with better education compared to the regional states. So, the policyholder may invest the funds to accumulate guaranteed returns to pay the education fee.

  2. Marriage

    The parents may start saving early to accumulate significant wealth for the marriage of their daughter. Therefore, it is advisable for parents to begin prematurely to preserve considerable wealth.

  3. Financial security

    Financial security could be a perfect epitome or endowment insurance example to understand the concept. It is vital to secure the financial security of the family member or relatives in the absence of the policyholder. Hence, an investment in an endowment plan must be initiated to meet the financial requirement of family members.

  4. Wealth Creation

    Wealth creation is another endowment insurance example that can be accomplished by allocating funds in an endowment plan. Upon achieving other financial goals, a policyholder must stick to the creation of wealth to beat inflation. Wealth creation is probably the only means to fight inflation. In addition, wealth creation is also essential to provide a promising future to the next generation. Therefore, the parents must contemplate the legacy and future of the upcoming generation. Hence, it is fruitful to purchase an endowment plan for the policyholder. 

Types of Endowment Life Insurance Policy

An endowment plan is one of the best financial tools to beat inflation and provide financial security to the dependent members of the family. Hence, an individual must understand the types of endowment life insurance policies before buying. 

Listed below are five different types of endowment plan life insurance policies that individuals may consider purchasing to meet their financial circumstances.

  1. Unit Linked Endowment Plan

    Under this type of endowment life insurance policy, the premium a policyholder pays is divided into two parts. The first part is utilized to purchase units in an investment fund. The unit could be equity, debt, or hybrid fund. This type of endowment life insurance policy allows investors to invest in a capital market to earn significant wealth in long-term financial planning. The other part of the premium covers the life insurance of an individual. In addition, this type of endowment life insurance policy is also comprehended as ULIP (Unit Linked Insurance Plan). The policyholder may find various tools to calculate the overall returns he may generate from unit linked endowment plan. 

    Additionally, it is at the discretion of the policyholder to choose the fund type in order to invest the premium amount. For example, if the policyholder has a high-risk appetite, he may invest in equity which offers moderate to high risk and a significant rate of returns. At the same time, the policyholder may invest in a debt fund in order to reduce the risk and earn a reasonable return. Further, the investor may also choose the hybrid form of fund in this type of endowment life insurance policy in order to balance the risk and returns. 

    However, it is essential to note that the ULIP comes with five years lock-in period. It means the policyholder is not entitled to withdraw any amount before five years. Nevertheless, he may make a partial withdrawal after the lock-in period. Therefore, the policyholder must invest in this type of endowment life insurance policy to ensure dual benefits.

  2. Guaranteed Endowment Plan

    In this type of endowment life insurance policy, the policyholder is entitled to receive a guaranteed or assured return. At the expiry or maturity of this type of endowment life insurance policy, the policyholder receives the lump sum guaranteed returns along with the loyalty funds. Apart from guaranteed returns, a policyholder may also receive the yearly addition funds if he survives the term of the policy. 

  3. Full/With Profit Endowment Plan

    In this type of endowment life insurance policy, the policyholder gets a guaranteed sum assured when purchasing the policy. However, the amount can be higher if the company declares a bonus on the final payout. In this type of endowment life insurance policy, the policyholder may also get a surplus amount on his demise. The nominee will be entitled to get the sum assured.

  4. Low-cost Endowment Plan

    Under this type of endowment life insurance policy, the policyholder may accumulate the funds entitled to be paid on the predefined period. As a result, the policyholder may build a vast corpus that can be utilized to pay off the loan or write off the mortgages. In addition, if the policyholder passes away, all the benefits will serve the nominee. 

  5. Non-profit Endowment Plan

    Under this type of endowment life insurance policy, the policyholder gets a guaranteed addition apart from the assured returns.

Conclusion

An endowment plan is a life insurance policy that offers a lump sum amount to the policyholder on the plan's maturity. In addition, if the policyholder passes away, the nominee will be entitled to utilize the benefits of the endowment plan. As a result, the policyholder may build a risk-free corpus and ensure the financial security of the family members. There are various types of endowment life insurance policy that offers different kinds of benefits to the policyholder. He may choose one and utilize the benefits by paying the premium.

FAQ's

  • What are the endowment insurance examples to understand the benefits of the policy?

    Here are the endowment insurance examples to better comprehend its benefits.
    • Life coverage
    • Guaranteed or assured returns
    • Flexibility in the allocation of the premium
    • Low risk
    • Bonus
  • Under which section do I claim the tax benefits in every type of endowment life insurance policy?

    A policyholder, under Sections 80C and 10 (10D) of the Income Tax Act, 1961, may claim tax benefits under every type of endowment life insurance policy.
  • What are the charges under ULIP?

    Listed below are the charges a policyholder is bound to bear.
    • Fund allocating charges
    • Mortality charges
    • Fund management charges
    • Policy administration charges
    • Surrender charges
  • What is the additional bonus a policyholder gets under the endowment plan?

    The policyholder gets the following benefits.
    • Guaranteed Yearly Additions
    • Guaranteed Loyalty Additions
  • When should I buy an endowment policy?

    An endowment policy should be purchased as early as possible in order to claim more benefits and accumulate significant funds.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL