What Is an Endowment Policy?
Every year lakhs of people die in road accidents in India. In 2022, approximately 1.5 lakh such deaths were recorded in India6. Life insurance may be essential to have a financial security to deal with such unforeseen circumstances.
Keeping an insurance policy active requires you to pay the premiums on time. But you also have other goals for which you need to set aside a portion of the monthly income as savings. How do you balance between savings and insurance? One option you may consider is to invest in an endowment plan.
What is an Endowment Plan?
An endowment plan is an insurance plan that provides the benefit of insurance as well as savings. Any insurance policy that offers death benefit along with providing with a maturity benefit can be termed an endowment plan. The policyholder receives a pay-out at maturity, but if life assured dies during the policy term, the nominee is paid the sum assured. An endowment plan can be unit-linked or non-linked.
Primarily endowment policies are of seven types —
- Pure Endowment Plans
- Whole Life Endowment Plans
- Child-Oriented Endowment Plans
Money Back Plans
- Unit-Linked Endowment Plans
- Participating Endowment Plans
- Non-Participating Endowment Plans