Endowment life insurance policies are popular because they provide tax benefits and are also easier to set up than other types of life insurance policies. Endowment life insurance plans are a great way to provide financial security for your family. They offer a range of benefits and features that can help you plan for the future.
In this article, we will provide you with an overview of endowment life insurance plans, including what they are, how they work, and the different types of endowment policies available. We'll also discuss the advantages and disadvantages of these policies so you can make an informed decision about the best plan for your family's needs.
What is Endowment Life Insurance?
An endowment life insurance plan is an investment plan that is designed to provide a regular income for the investor. It is often used as a retirement savings plan. This type of insurance policy can be purchased over the internet or through an agent.
Endowment life insurance plans are similar to annuity plans, which are also investment plans that provide income for their investors. The difference between them lies in how they are invested and what type of investments they use to generate revenue for their investors.
An Endowment policy is a life insurance plan that apart from covering the life of the insured against uncertain death helps to save a certain amount of money regularly over some time. In short, an endowment policy consists of both the Insurance coverage and the Savings option. This amount saved under the endowment life insurance policy is known as the maturity amount and is paid to the policyholder in case he/she survives the policy period or dies during the policy period.
This savings component is paid to the nominee in case of the death of the policyholder or to the policyholder in case of maturity if the policy is a survival benefit and can be used for Children’s education, Marriage expense, or purchasing a home. Thus any term insurance policy with a saving component and insurance component can be considered as an Endowment policy.
Why Need Endowment Life Insurance Policy?
Endowment plans are a way for people to save for their future. They are designed to provide financial security in the event of an emergency or the loss of income. The need for endowment plans is growing because more people are working in jobs that have uncertain incomes and lack job security.
Endowment Life Insurance is a type of life insurance that pays a lump sum amount at the time of death. The amount is higher than that of other types of life insurance. This type of insurance is used by people who want to provide for their loved ones but do not want to worry about their future financial needs.
Endowment Life Insurance can be used for different purposes such as funding education, starting a business, or saving for retirement. It also helps people who have large debts and need protection against creditors.
Types Endowment Life Insurance Plans
Below is the type of endowment plans. One can choose the plan depending on the requirement and future planning such as Children's Education expenses, Marriage expenses, etc. They are two types: - with profit and without profit.
1) Full Endowment/With Profit Endowment: Under the Full/With Profit endowment plan, a basic sum is assured to the policyholder at the start of the plan. However, the final pay-out is comparatively much higher than the basic amount since it combines specific bonuses announced by the company during the plan's tenure. Once declared, the bonuses become a part of the policy and are received by the beneficiary upon a claim or after maturity.
2) Non-Profit Endowment: In the case of a non-profit endowment plan, a predetermined lump sum amount is payable at the time of maturity or to the beneficiary in case of the policyholder's demise, whichever occurs earlier. However, unlike full endowment plans, they come without any bonuses, and the sum remains unchanged. These are fully guaranteed in nature.
3) Unit Linked Endowment: Under Unit Linked policies, the insurance premiums are directed into multiple units held under a specific investment fund which can be chosen by the policyholders.
4) Low-Cost Endowment: This endowment plan has been introduced to allow individuals to accumulate the funds which have to be paid after a specified period, usually mortgage.
Top 5 Best Endowment Life Insurance Plans in India
| Endowment Life Insurance Policy |
Entry Age |
Maturity Age |
Policy Term |
Premium Payment Option |
Sum Assured |
| Reliance Nippon Life Super Endowment Plan |
Minimum 8 to Maximum 60 years |
Minimum 22 to Maximum 75 years |
14 and 20 years |
Yearly, Half-yearly, Quarterly, Monthly |
Rs. 1,00,000/- to No limit |
| PNB MetLife Endowment Savings Plan Plus |
18 years |
80 years |
5, 10, 25 years |
Yearly, half-yearly, and Monthly. |
Rs. 2 lakhs |
| LIC’s NEW ENDOWMENT PLUS |
90 days |
60 years |
10 to 20 years |
Based on monthly, quarter, half-yearly, annually. |
Rs. 3000 per month |
| Edelweiss Tokio Life Single Pay Endowment Assurance Plan |
Minimum 3 years to Maximum 70 years |
Minimum 18 years to Maximum 80 years |
10 and 15 years |
Rs.50,000/- |
Single pay |
| Shriram Life Assured Advantage Plus |
8 years |
70 years |
10 years |
Rs. 10 lakhs |
Single pay |
| Aditya Birla Sun Life Insurance Vision Endowment Plus Plan |
30 days |
60 years |
7,10,15,20 years |
Rs.1 lakh |
Yearly, half-yearly, quarterly, monthly |
Key Features of Endowment Life Insurance Policies
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Low-risk investment: An endowment policy is your low-risk investment avenue. In comparison to Mutual Funds and ULIP's, your life insurance endowment policy has lower risk because your money doesn't directly go into equity funds or the stock market.
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Flexible premium payments: Under endowment policy, you can choose to pay your premiums monthly, quarterly, half-yearly, or yearly. You can select the frequency of the premium payments depending on your feasibility.
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Flexibility in cover: You can enhance the base plan to get additional insurance against critical illnesses, disability, and accidental death. This additional bonus coverage is called riders. You will have to pay some extra amount over and above your base premium to add riders to your base plan.
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Maturity: The policyholder gets a maturity benefit upon the end of the term. The policyholder receives a sum assured and bonus for the duration of the plan. The sum assured from the maturity benefit is exempted from tax up to a limit.
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Tax benefits: The policyholder is entitled to get tax exemption on premium payments, maturity, and final pay-outs under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
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Death along with Survival benefits: In case of demise of the insured, the beneficiary/nominee of the policy gets the sum assured along with bonuses. Also, the insured is allowed to get the sum assured if he/she outlives the policy.
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Higher returns: An endowment policy helps build a corpus for the future and provides financial protection to your family. The payout for survival benefit and death benefit of an endowment plan is higher than that of a pure life insurance policy i.e. Term Plans.
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Guaranteed savings no matter what: An endowment policy gives fixed returns. So, your financial goals and family's future are always in safe hands
Endowment Life Insurance Benefits
Here are the top Endowment Policy Benefits:-
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Loan Benefit: Once a policy acquires a surrender value, you can take a policy loan. It might be helpful during an emergency when you need immediate financial assistance.
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Rider Benefits: There are several riders offered along with the endowment plan to strengthen their coverage. Some of these are accidental death rider, critical illness cover, disability, waiver of premium, and more.
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Life Insurance Benefit: An endowment plan ensures that your loved ones maintain a peaceful life even in times of crisis. The life insurance benefit provides them with a lump-sum payout, a fixed amount, given at the time of claim settlement. Some policies also offer additional benefits in the form of a reversionary bonus.
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Maturity Benefit: The maturity benefit with endowment plans remains intact as long as the policyholder pays timely premiums. The maturity benefit depends on several factors, such as the policy tenure, premium amount, policyholder's gender, age, and more. The amount received as a maturity benefit is also tax-free.
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Tax Benefit: Under Section 80C, the premiums payable under an endowment plan are eligible for a tax deduction. Furthermore, there are tax benefits on the maturity benefit as well. It helps reduce financial stress on your family during the policy tenure and in a time of need.
Add-ons/Riders of Endowment Life Insurance Plan
Disability: The disability rider proves to be highly beneficial to the policyholder if he/she suffers from a partial or permanent disability.
Waiver of premium: Through this rider, the insured is not liable to pay the premiums of the endowment policy in case the policyholder suffers from a critical illness or is permanently disabled.
Critical Illness: If the policyholder is diagnosed with a critical illness like cancer, heart attack, paralysis, kidney failure, etc. The policyholder will get a lump sum amount.
Accidental Death: When the policyholder opts for this additional rider, the insurer will pay an accidental death benefit in addition to the Death Benefit to be given to the beneficiary.
Hospital Cash Benefit: Hospital Cash Benefit provides you with daily allowance as well as post-hospitalization benefits, in case of hospitalization of the policyholder.
Tips to Follow Before Buying an Endowment Policy
The cost of the premium is also the deciding factor as the premium of endowment plans is costlier as compared to other investment plans. Also, other factors to keep in mind would be the insurance provider’s track record in terms of the bonuses, customer service provided by the insurer, their claim settlement ratio, financial status of the insurer, etc.
In simple terms, you should buy an endowment policy that is simple and does not come with features and benefits which are difficult to comprehend.
Affordable premium: The cost of the premium is probably the first thing insurance customers look for. Since endowment policies are a long-term financial commitment, and affordable premium is a must. A very big premium amount may lead to a situation when you are forced to stop due to exigencies
Claim settlement ratio and process: You must choose an endowment policy from an insurer who has a high and consistent claim settlement ratio. Additionally, a simple and fast claim process should be preferred. Buy policies from an insurer where claims can be reported online, at branches, central office, SMS or email, etc.
Flexible premium payment options: Invest in a plan that allows you to pay premium monthly, quarterly, or annually, so that it suits your income pattern
Plan early: If you buy an endowment life insurance plan early, not only do you get lower premiums with a high sum assured, you can also choose a long policy term and generate a large savings fund over time
Option to add riders: Riders can provide you with increased benefits. Make sure to look for an insurer that lets you add riders to your policy to enhance the scope of the coverage.
How to Compare & Buy Endowment Life Insurance Policy Online?
The process of comparing and buy an endowment plan life insurance premiums online has become simple with PolicyBachat. For buying Endowment Life Insurance Plan online please visit our website Policybachat.com Following are steps to compare plans online in our portal.
- Visit the PolicyBachat Website and select the ‘Life’ tab.
- Enter your Name, Date of Birth, and Mobile Number.
- Click on the ‘View Plans’ button.
- Just Answer 5 Simple Questions.
- Select your ‘Gender’.
- Select ‘YES’ or ‘No’ if you have Smoked or Chewed Tobacco in the last 12 months.
- Select your ‘Annual Income’.
- Select your ‘Education Qualification’.
- Choose your ‘Occupation Type’.
- Enter your ‘Email Address.
- Then click on ‘Start Saving Money.
- Premium Quotes of top Endowment life insurance plans will be displayed as per data entered by you and which are suits your requirement.
- You can edit policy details, sum insured value, policy terms and you can choose your preferred company.
- Purchase the best endowment policy in India using online payment.
How to Claim Endowment Life Insurance Policy?
- The claim form should be signed by the nominee of the policyholder/ assignee or legal heirs for getting the death benefit.
- The loss statement should be provided by the last treating doctor who has checked the insured.
- The certificate should be provided by the authorities of the hospital where the insured is being treated.
- Statement of a witness and death certificate, which was present at the time of cremation, must be given.
- If the insurance company needs a discharge voucher, then it should be provided after filling the voucher. For effective and fast sanction of the death benefit, an additional form as mentioned below should be provided for filling the death claim:
- Post Mortem’s certified copy, police investigation report, and First Information Report – in the situation of the death of the policyholder was unnatural.
- Employer’s e-certificate, if the insured was working in an organization.
Conclusion
Endowment plans are an important part of financial planning, as they provide long-term savings and investments that can help you achieve your financial goals. However, it is important to compare premiums and returns from different endowment plans in order to make the best decision for your needs. By comparing life insurance quotes at PolicyBachat you can easily choose the right endowment life insurance policy, and you'll be able to make an informed decision that best fits your family's needs.
FAQs of Endowment Life Insurance Policy:
How to Choose an Endowment Policy?
Life insurance is a way to protect your family financially in the event of death. But it is not just about protecting your family. It is also about providing for your loved ones. The key to getting the right endowment policy for you is to have a clear understanding of what you want from it and how much coverage you need.
Documents Required for Endowment Life Insurance Policy:
Following are the documents required to apply for an endowment policy:
- Age proof
- Photograph
- Address proof/ proof of residence
- Filled application form/proposal form
- Medical reports
What Should I Know About Term Plan vs. Endowment Plan?
Term plans offer a predetermined payout in case of loss of life before the maturity of the policy. Endowment plans provide the basic sum assured (and bonus, if applicable) upon maturity to the policyholder or the beneficiary upon the claim.
What is the Process for Cancelling an Endowment Policy?
The general procedure to cancel an Endowment policy requires individuals to visit their insurance provider along with the necessary documents like the original policy document, ID proof, Surrender / Cancellation Form, and a canceled cheque for fund transfer. While the cancellation procedure may differ with each insurer, hence it is wiser to contact your insurer to get to know the procedure.
How is the Premium Determined for an Endowment Plan?
Most endowment plans offer you the flexibility to choose the premium amount you want to pay. A part of the premium gets invested and provides you a return. The remaining provides you with a life cover. The percentage of your premium contributed towards your life cover depends on the below factors:
- Age: When you are younger, you are more likely to be fit and hence the premium is lower. This premium increases with age
- Sum Assured: This is the amount your loved ones will receive in case of an unfortunate event. The higher the amount, the higher will be your premium
- Medical history: Unhealthy habits such as the consumption of tobacco or alcohol may lead to an increased risk free of diseases. Hence, the premium can be higher in such cases. Similarly, health issues that are existing or have occurred in the past also may lead to an increase in premium