Site icon Woman's era

When Should I Start An Endowment Policy?

Endowment Plan Meaning:

Endowment  plan works with dual benefits of insurance as well as saving. Endowment plan provides life insurance coverage and maturity benefit. The maturity benefit is given to the policyholder on survival ,after an agreed time period.

For sound financial planning it is important to save regularly, create wealth with secured returns. All these three are fulfilled by endowment plans.

 

The life coverage benefit secures the family’s future.

Endowment plans give decent returns to create sizable funds. The endowment plans are meant to serve different purposes of investment for different life stages. Endowment plans keep paying the benefits unless and until premium payments are discontinued.

Types of endowment plans:

1.Unit Linked Endowment: This is a type of endowment plan where the funds are invested in the markets to capitalize the returns. The returns you make in this investment completely depends upon the market performance.

2.Pure Endowment:  Pure endowment plans completely work on the bonus structure. The performance of the company is directly linked to the bonus payout in the investment.

The returns that you get on maturity will be quite higher than the expected return.

3.Low Cost endowment: Low cost endowment plans are designed with the aim of repaying the mortgages. The lumpsum amount is given on the maturity or death of the policy holder. The lump sum received is used to make part payments or set off entire mortgage loans.

4.Non Profit Endowment:  Non profit endowment plan as the name suggests does not participate in the profits made by the company. Hence there are no bonuses added to investment at maturity. The sum assured is paid out either on death or maturity whichever is earlier.

5.Unitized with profit endowment: Unitized with profit endowment plans work with guaranteed payback along with unitized market linked performance. Guaranteed amount is unaffected by market uncertainties. 

Right time to start:

Endowment plans make an individual start analyzing financial goals and give a push to save money. 

Savings is a habit and there is no defined right time. The above is suggested right time to start ,considering product entry age and different milestones of life.

Benefits of starting early:

“Save money while you are earning because money will save you when you are not earning”

Like discussed above, endowment plans make disciplined savings. These plans also help in wealth creation. 

Starting early will always help you save more over a time period and make you learn and grow from mistakes made on financial aspects of savings and investment.

Now let us have an overview of starting early investment in endowment plans:

Overall Benefits of investing in an endowment plan:

Conclusion:

Endowment plans work differently for different sets of investors. Being one of the oldest investment types in the insurance market. Endowment plans still have market sustainability because of the set mindshare of people. 

Endowment plans are saving oriented plans along with an attached coverage to provide security to the loved ones of investors.

Endowment plans are designed for someone who is risk averse and wants a stable return at maturity. The major component of the funds invested goes into debt instruments making it a low risk investment.

To know more about endowment plans, visit here.

Exit mobile version