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With so many types of life insurance products available in the market, we may tend to get confused. In this article, we will talk about what is an endowment policy? and the types of endowment policies.
An endowment policy is a life insurance policy with dual benefits. It provides you the benefit of a life insurance cover along with a savings plan. It helps the policyholder save regularly over a specified time so they can receive a lump sum amount on the maturity of the policy. However, in case the policyholder dies during this period, the insurance company will be liable to pay the sum assured as well as any accumulated bonus to the policy nominee.
An endowment policy is a well-suited plan for post-retirement.
Now, let us understand the various types of endowments policies
A unit-linked endowment plan is a policy that is a combination of life insurance and investment. In this plan, part of your premium will be taken towards your life coverage and part will be systematically invested in equity/debt securities (based on the plan you choose). The return on your investment will depend on the performance of the fund.
As the name suggests, A full/with profit endowment plan provides the policyholder with the sum insured as well as any bonus accumulated with it on the maturity of the policy. In case of death of the insured, the nominee will receive the sum insured as well as the bonus amount. The final payout will be relatively higher than the sum insured as it is combined with profits generated from the bonus.
Low-cost endowment plans have been specifically designed for individuals who want to save their funds (savings) and use them for a specific purpose after a certain period of time such as repayment of loans etc. If the policyholder dies, the nominee will receive the entire fund amount.
A child endowment policy is specifically designed to protect and cater to the financial requirements of your child in the future. It offers protection, savings, and investment. The sum assured as well as return from the investments will be payable to your child as a lump sum when your child attains maturity between 18-22 years of age.
Under this plan the sum assured will be paid to the policyholder on the maturity date of the policy or the nominee of the policy in case the policyholder passes away. As the name suggests, only the sum assured will be paid no additional bonus will be included.
Now lets us look into some benefits of an endowment policy and how they may help you.