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What Is An Endowment Policy?

By Finserv MARKETS - Aug 22,2019
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Everything About Endowment Policy Investment

While a majority of Indians prefer savings, the rest opt for investments for the growth of their money. However, the benefits of investment are enormous. One of the most popular investment plans is an endowment policy. An endowment policy is a combination of insurance and savings in a single integrated plan.

Before purchasing an endowment policy, every individual must know the basics of the policy. Go through the following to understand everything about endowment plans:

What is an endowment policy?

Keeping the essence of savings in mind, endowment plan not only offers the benefits of savings but also insurance to all its policyholders. It allows the customers to save regularly for a specific duration. During an unfortunate event like the death of the policyholder, the insurer provides sum assured to the nominees. In the case of survival, he/she receives a lump-sum payout on the date of maturity.

On the other hand, an endowment policy is often confused with the Unit Linked Insurance Plans. However, this is not the case since both the policies are different from each other. Here’s a closer look at the distinction between endowment and ULIP policy:

ENDOWMENT PLANS ULIP PLANS
It is a combination of insurance and savings in a single plan It is a combination of investment and insurance in a single plan
It has a lock-in period of 2-3 years It has a lock-in period of 5 years
The returns are fixed ULIP returns depend on the market performance
Cannot make any changes after purchasing the policy Flexibility is one of the key ULIP benefits. Bajaj Allianz’s Policy allows A policyholder to switch from one fund to another based on his needs
There are certain restrictions and penalties for withdrawal An investor can opt for withdrawal after the completion of the lock-in period

 

When should you choose endowment plans?

  • For the security of your loved ones

Every policyholder strives hard for the well being of their loved ones. Hence, it is essential to ensure a risk-free investment portfolio to protect his/her needs. With endowment plans, an individual is able to protect his family as well as ensure goal-based savings. Moreover, the accumulated corpus allows him/her to accomplish the long-term goals of his family with death benefits.

  • For a steady flow of income

Endowment plans inculcate a disciplined saving habit in every individual. The income generated from endowment policy acts as income replacement. On the death of the policyholder, the nominees can utilize the money to sustain financially in the long run. Moreover, the returns garnered from an investment in an endowment policy is tax-free.

To sum up, an endowment plan offers insurance plus savings whereas a ULIP policy is insurance plus investment. Therefore, an investor must ensure the proper selection of the policy. The right investment policy will let a policyholder reap maximum benefits in the long run. Bajaj Allianz Goal Assure Plan provides policyholders with flexibility, ULIP tax benefits and much more! Head to Finserv MARKETS for a free quote today!

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522