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Tips to choose the right endowment plan for you.

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If freedom, travel, luxury, or happy living excites you, then you already know the relevance of money and time.

Was any of the things mentioned above possible without money?

Apart from the responsibilities and the monthly expenses, you need a good amount of savings in life to make your dreams come true. 

Building emergency funds or savings for the good times is the first thought that floods your mind when you talk about the future. But it isn’t possible for everyone to keep aside money monthly and create funds out of it. 

Then what?

Should these people live only with dreams without even a hope of fulfilling either of them? No right?

The better alternative is to buy an endowment plan. The life insurance policy helps the individual to save over the years and get higher returns than otherwise.

Let us further explore more about the endowment plan.

What is an Endowment Plan?

An endowment plan is also called a savings plan. It is the life insurance policy that offers dual benefits of life cover as well as the opportunity to save. The insurance policy helps you achieve your life long-term or short-term goals by allowing you to save regularly and steadily. 

The protection part of the endowment plan provides a payout to the nominee if the life insured passes away during the policy term.

Under the savings plan, if the life insured survives the complete policy term, the entire sum assured is paid along with the bonuses. The bonus is complimentary that the insurance company declares every year if they make a profit out of their business.

Before moving on to how you should choose the endowment plan, let us first read the benefits of the insurance policy in an elaborate manner.

Benefits of Endowment Policy.

When you know that your current expenses are higher than your earnings, it is important that you save through a life insurance policy. Though the premium paying capacity can be limited, watching and reading the benefits can push you to buy the endowment plan.

  1. Dual Benefit under the same plan: The endowment plan is a dual benefit policy that offers both life protection as well as the opportunity for savings. If the life insured passes away, the nominee gets the payout which consists of the sum assured as well as a bonus. Apart from the life cover, the policy gives you an opportunity to save.
  2. Gains in the form of regular bonus: The insurance company under the savings plan, declares a bonus occasionally. The bonus is announced when the insurer earns a profit in a financial year. The company can issue a reversionary or terminal bonus to enhance the pay-out for you.
  3. Low-risk policy: The savings plan is a low-risk policy. You can save more and better every month when you buy an insurance policy. When you save money by keeping aside money, you often tend to break the routine. You might, in case of emergency, pull out the funds thus reducing the savings. This is why a savings insurance plan is better.
  4. Rider Benefits: The savings plan also gives you the benefit of expanding the scope of coverage. You get more protection against accidental death benefits, accidental death and disability rider, critical illness, hospital care, etc, with the help of the riders. The riders are additional covers that come at a nominal premium. You can buy these riders either at the inception of the policy or at the time of revival.
  5. Tax Benefits: The savings plan offers you tax benefits. All the premium paid in a year is eligible for tax deduction under Section 80C of the Income Tax Act, 1961. The maturity received at the end of the policy is also tax-exempt under Section 10(10D).

If by now you are convinced to get this life insurance policy, you must be cautious of a few things before buying the endowment plan.

Tips to Choose the Right Endowment Plan for You.

These are the tips you must bear in mind to choose the right endowment plan for you:

  1. Begin Early: the Sooner you start, the better it is. When you buy a savings plan early in life, the power of compounding over the years will yield high results. In the end, you get a higher amount than what you invest. For example, you buy an Assured Income Plus savings plan from Aditya Birla Sun Life Insurance. If you pay Rs.1.20 lakhs annually for 12 years when your age is 21 years, you get Rs.47.16 lakhs in return. Just in a few years, you will get more than what you invested.
  2. Verify the plan features: Before buying the savings plan, make sure that the life goals are aligned with the plan offerings. The plan must offer you flexible premium payment, free withdrawals, and other additional features.
  3. Check whether the plan is available online or not: Check to see if the plan is available online. You can review the returns on offer and check the kind of returns on your endowment plan once the plan is published online.

Returns can be guaranteed (payable on death or maturity) or non-guaranteed (including variable bonuses that are dependent on the investment’s performance). You can also inquire about the potential for a bonus from the savings plan. Other than the returns, online plans save you a lot of time and money.

  1. Premium Paying Capacity: Select a savings plan with an affordable premium. After examining the amount you can tolerate for how many years, you can carefully choose a premium amount and premium payment schedule. You can select the flexibility for premium payments in addition to the payment term and premium. The savings plan allows you to pay your premiums annually, monthly, quarterly, or half-yearly.
  2. Guaranteed Returns and life goals: Look for the returns that the plan can offer. Align it with the life goals you have. Evaluate and then buy the insurance plan.

Best Endowment Plan to Buy

The best endowment plan that you can buy include:

ABSLI Assured Income Plus Plan

→ The life insurance policy offers you to invest for the short term and provides you guaranteed returns for the long term.

→ You get long-term regular income for 20, 25, or 30 years to fulfill your needs.

→ The insurance policy provides you the option to choose from Income Only Benefit or Income Benefit with Return of Premium (ROP).

→ You are entitled to get loyalty additions.

→ The plan can be purchased online ABSLI Assured Income Plus.

Conclusion

Savings is an important part of your life. Most significantly, you can rely on savings to meet your family’s financial demands and provide financial stability through difficult times. However, it’s critical to pick a savings vehicle that permits you to increase your money. This is when a financial tool like Endowment Plan comes in handy and proves to be an excellent match. For more information on the endowment insurance policy, please visit here.

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