Endowment life plan gives you twin benefits
You have to pay a premium to avail an endowment life policy. Your life is insured for a sum of money (sum assured), depending on the premium you pay.
The endowment life policy has a maturity period. You can opt for a maturity period of 10, 20 or even 30 years .In case you (policy holder), survive the term of the policy, you get survival benefits.(maturity benefits)
An endowment life plan invests your money in fixed income securities (debt) and also in bonds so that you get fixed returns.
If you (policy holder), die soon after taking the policy, your family gets only the sum assured amounts and no bonuses. If you survive till maturity you get a maturity benefit (sum assured + all bonuses).
Guaranteed Bonus: The endowment life policy pays a guaranteed bonus (% of the sum assured), for the first 5 years of the policy.
Revisionary Bonus: This bonus is paid for the next 5 years of the policy after you get the guaranteed bonus. This bonus is paid out of the profits of the policy. (If there are profits).If there are no profits there is no revisionary bonus.
Terminal Bonus : This bonus is paid out in the final year of the endowment life policy.
You get insurance + savings benefit. You get the money you invest with returns and also a periodic bonus at the maturity of the plan.
Helps you achieve your financial goals such as education for your children and also money for your childrens marriage.
Riders give you lump sum amounts at critical times when you need money the most. They supplement your returns.
You get tax deductions on your salary, if you invest in the endowment plan. The amount you get at maturity is tax free.
You can surrender your endowment life policy only after 2 years of holding the policy. This is possible only if the endowment life policy has a premium paying term (time you pay the premium), less than 10 years. You get 30% of the premiums you have paid in the first year and second year of the policy.
If the premium paying term of the endowment life policy is more than 10 years, then you have to surrender the policy only after 3 years. You get 30% of the premiums you have paid in the first year, second year and the third year of the policy.
If you have paid premiums for at least 3 years on your endowment life policy, you have the option to convert your policy to a paid up endowment policy.
If you are dissatisfied with your endowment life policy, but do not want to surrender it, you discontinue paying premiums on the policy. Your policy continues till maturity, but your sum assured is reduced.
No bonus is given to you from the time you discontinue paying the premiums on the policy.
The premiums you pay for the endowment life plan are deducted from your taxable salary up to INR 1.5 Lakhs per year under Section 80 C of the income tax act.
The money your family (spouse and children), receive on your (policyholders) death, is tax free under Section 10(10D) of the income tax act.
You pay the premium for the endowment life policy and an additional amount for the rider. An accidental death benefit rider gives your nominee's (family/heirs), an (additional amount + policy amount), if you (policy holder), die in an accident.
A critical illness rider gives you a lump sum of money when you (policy holder) suffer a critical illness such as cancer, heart attack or a stroke.
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