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Everything you need to know about Endowment Policy and its Benefits

An endowment policy is essentially a life insurance policy that offers you a dual purpose. With this plan, you can have financial protection at the time of emergencies, and along with it, you can continue to do your savings over a particular time period. 

Thus, you can use the amount of maturity in different financial needs like buying a house, children’s education, travelling or marriage, etc. However, the beneficiary will get the entire sum in the policyholder’s absence. Endowment policy also allows you to have tax-free returns.

In this article, we will discuss everything you must know about an endowment policy.

What Is An Endowment Insurance Policy?

Endowment plans are at the top of life insurance plans as they are highly effective in making your wealth grow while giving you the necessary financial cover. 

Therefore, you must buy an endowment policy if you want to have the tax benefits, life insurance protection, and maturity benefits altogether. Also, based on your policy term, you get the maturity benefits.

Who Can Buy An Endowment Policy?

A senior citizen or a young professional is allowed to buy an endowment policy. If you have any long-term non-negotiable goals or any family responsibilities, then you must consider purchasing this policy. It ensures you two-in-one benefits without any risk. Apart from this, the endowment policy also allows you to make small savings that you can carry for a more extended period.

When Should You Buy An Endowment Policy?

Endowment plans are investments free of risks. Thus, you can buy these plans to fulfil your saving-based goal or safeguard your loved ones. Moreover, the most important thing you must consider while getting this plan is that you already have a stable income

You should not have any problem while making regular investments and paying the premiums along with it. Hence, if your income is unstable, you should not prefer to get this particular plan and instead go for single pay plans.

Benefits of Purchasing An Endowment Policy

Mentioned below are some significant benefits of the Endowment Plan.

 1.Tax Benefit

The primary advantage of the endowment policy is that it provides tax benefits. Section 80C of the income tax act states that you could reduce your taxable income by paying your premium on time.

2.Life insurance benefit

The plan offers you life insurance benefits. In this, the nominee would get the fixed amount in the policyholder’s absence. With this, they also provide a reversionary bonus that is a part of death benefits.

3.Loan Benefit

With the endowment policy, you could quickly get a loan, and the interest charged on the loan is also competitive. Loan benefits are also helpful as you can use them at the time of emergencies.

The Bottom Line

Endowment policies consist of dual benefits and are highly flexible. It can be an excellent option for you to invest in the long term. Moreover, you must start saving early to receive better outcomes in the future. 

The endowment plans do not have any risk and also offer you additional bonuses.