Endowment Policy
An Endowment Policy is a type of life insurance that provides coverage for a specific period. If the policyholder lives until the policy matures, they receive a lump sum amount along with a bonus from the insurer. In case of an untimely demise of the policyholder during the policy term, the nominee receives the sum assured.
Highlights of Endowment Policy
Types of Endowment Policy
Below are some of the common Endowment Policy available in India:
Most Popular Endowment Policies
Motor insurance plan |
Policy Duration |
Entry Age (Minimum) |
Entry Age (Maximum) |
Add on Coverage benefit |
Age of Maturity |
|---|---|---|---|---|---|
Aviva i-life total |
4 plans:
Protect - 10 - 57 yrs Protect Plus - 10 - 57 yrs
Protect Assured - 15 - 30 yrs
Protect Income - 10 - 57 yrs
|
18 years
|
65 years
|
Riders on critical illness, complete disability, terminal illness
|
70 yrs with rider. 75 yrs, without rider
|
Aegon life i -term insurance policy |
5 - 40 yrs
|
18 years
|
65 years
|
Add-on, accident benefit death,premium waiver
|
28 yrs min to 70 yrs max
|
Bajaj Allianz iSecure term assurance plan |
Varies from 10 - 30 years
|
18 years
|
65 years
|
Premium waiver, disability waiver, accident death benefit
|
28 yrs min to 70 yrs max
|
Canara HSBC iSelect + Term plan |
Varies depending on plan from 5-62 yrs
|
18 years
|
65 years
|
N/A
|
80 yrs, 75 yrs
|
Edelweiss Tokio Life Total Secure+ |
Varies as per plan from 10- 62 yrs
|
18 years
|
65 years
|
Premium waiver, disability waiver, accident death benefit
|
80 yrs, 75 yrs
|
Future Generali Flexi Online term plan |
2 plans:
basic 10-75 yrs and
income protection 10-65 yr
|
Basic - 18 yrs Income protection - 25 yrs
|
Basic - 55 yrs Protection - 55 yrs
|
Accident death benefit rider
|
75 - 65 yrs
|
HDFC Life Click to protect Plus plan |
10-40 yrs
|
18 years
|
65 years
|
Accidental and critical illness cover
|
75 yrs
|
ICICI Prudential ICare II Term plan |
Varies between 5-67 yrs
|
18 years
|
65 years
|
available
|
65, 80 and 85 yrs
|
Best Personal Accident Insurance Plans Providers
Best Personal Accident Insurance Plans Providers
Sahi Advice,
Sahi Insurance
If you have any questions on how to choose the best insurance plan, you can connect with our IRDAI certified insurance advisors.
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Endowment Policy Everything You Need to Know
Features and Benefits of an Endowment Plan
In case of the insured’s death during the policy period, the nominee receives a benefit. If the insured survives the policy term, they get the sum assured.
Endowment plans provide a higher payout, whether as a death or survival benefit, compared to Term Plans. This helps create a financial safety net for the insured's family.
The premium payment of an endowment plan is based on the selected coverage and can be paid monthly, quarterly, semi-annually, or annually.
The insured can claim tax benefits on the premiums paid and the maturity sum under the Income Tax Act of 1961, Section 80C, and others.
Endowment plans are safer than many other investment options, making them suitable for those seeking low-risk investments.
How Does An Endowment Plan Work?
Here’s how it works.
Factors Affecting the Endowment Plan Premium
Every motor insurance company is likely to have a different premium offering for customers opting for personal accident insurance plans. This may vary between a few hundred rupees to thousands of rupees for high-end insurance providers. It is best recommended to check with the insurer that you opt for before purchasing the personal accident insurance policy to suit your specific budget.
Endowment Plan - Exclusions
Below are some standard exclusions of personal accident insurance policies:
Suicidal death
Stock and mutual funds are not included in the plan
Pre-existing conditions are not covered during the first 2 years of a policy
Self-inflicted injuries
Endowment Plan - Inclusions and Exclusion
Endowment Plan - Inclusions
The standard inclusions for personal accident insurance are –
Death due to natural causes
Accidental death
Death due to man-made disasters including terrorism and war
Death due to hazardous activities
Death due to participation in illegal activities
What to look for when buying an Endowment Policy?
Following are the things to look for while buying an endowment policy:
Start planning your investment early to build good financial health over time. This helps with disciplined saving and achieving better returns.
Review various options before purchasing an endowment plan, such as regular or single payment plans.
Understand the different types of endowment policies and their premium payment schedules before investing.
Choose a plan that offers rider options for additional benefits.
Some insurers provide bonuses based on their performance, distributing profits to policyholders at maturity.
Endowment Vs. Money Back Policy
Basis |
Money-back Plan |
Endowment Plan |
|---|---|---|
Significance |
Money-back policies combine investment and insurance. The insured receives a percentage of the sum assured regularly.
|
Endowment plans are insurance and investment plans. The insured receives the sum assured at the end of the policy if they outlive the term. In case of death of the policyholder during the term, the nominee gets the death benefit and bonuses.
|
Policy Duration |
The policy terms range from 5 to 25 years.
|
The policy terms range from 10 to 35 years.
|
Key Benefits |
Key benefit is regular payments of the sum assured percentage
|
Key benefit is a lump sum payment along with a bonus at maturity.
|
Loans |
Loans cannot be taken against this policy.
|
Loans can be taken against the plan using it as security.
|
Endowment Policy Vs. Term Insurance
Below are some of the key differences between Endowment insurance policy and Term Insurance:
Endowment Plan |
Term Insurance |
|---|---|
|
Offers both insurance coverage and savings.
|
Provides only life insurance coverage. Protects the nominee in case of the insured’s death during the policy period.
|
|
Higher premium rates due to maturity benefit and loyalty bonus.
|
Premium rates are lower as they only offer death benefit.
|
|
Does not offer a higher sum assured.
|
Offer a higher sum assured.
|
|
Lump-sum payment is made to the beneficiary.
|
Beneficiary receives the sum assured as a death benefit.
|
Endowment Policy Vs. ULIPs
Below are the key differences between best endowment policy and ULIPs:
Endowment Plans |
ULIPs |
|---|---|
|
Insurance plus Savings Plans.
|
Insurance plus Investment Plans.
|
|
Lock-in period is usually 2-3 years.
|
Lock-in period is usually 5 years.
|
|
Lack transparency.
|
Easily trackable investment portfolio.
|
|
Insured receives sum assured plus bonus at maturity.
|
Insured gains investment returns at maturity.
|
|
Policy cannot be changed or switched.
|
Free switches of funds are allowed.
|
Endowment Plan Claim Procedure
In case of the death of a policyholder during the policy term
- Inform the insurance company
- Submit the required documents (detailed below)
- In case of a request by the insurer for some additional documents, submit those within 90 days of the date of request
- Upon evaluation, the insurer would hand out the lump sum amount to the nominee of the insured
In the case of policyholder survival through the term
- Claim the maturity benefit by visiting the insurance company
- Submit the required documents (detailed below)
- Upon assessment of all documents, the insurer would credit the benefit to your account
List the documents required for purchasing an endowment plan
Below are the documents required for purchasing an endowment plan:
In the case of policyholder survival through the term:
Ask Anything as We Have Answers to Everything in Insurance
An Endowment Plan is a type of life insurance that protects the insured for a specified period. If the insured survives this period, they receive a lump sum amount. In case of the insured’s death during the policy term, the nominee receives the sum assured as a death benefit.
Yes, an endowment plan is different from a term plan. In a term plan, the nominee receives a lump sum in case of the insured’s death during the policy term. If the insured survives, no amount is paid. In an endowment plan, the nominee also receives a lump sum in case of the insured’s death, but if the insured survives, they receive the sum assured plus any accrued bonus.
Below are the things guaranteed under endowment plans:
- Lump sum amount if the insured survives the policy term.
- Lump sum amount to beneficiaries in case of the insured’s death during the policy term.
- Sum assured either on or before the policy maturity date.
- Bonuses, which depend on the policy’s duration, are not guaranteed.
Additional bonus is an amount that the insurer pays extra to the policyholder. Endowment policies allow two kinds of extra bonuses:
Reversionary bonus: It is paid with the sum assured at maturity or in case of the insured's untimely death.
Terminal bonus: It is optional and paid at maturity or early death of the insured.
Endowment plan should be bought because it allows basic benefits of life insurance along with additional benefits such as:
- Double endowment
- Educational endowment
- Marriage endowment
Further, the plan allows the insured to buy extra riders to add to the basic plan.
Anyone looking for a low-risk investment with insurance, savings, and wealth creation benefits should consider an endowment plan.
Yes, endowment policies are excellent investment options. They encourage disciplined saving, fulfill financial needs, and provide life coverage for the insured's family if the policyholder dies before maturity.
Yes, invest in an endowment policy to develop a saving habit and gain insurance coverage benefits, which makes it a popular investment tool.
Yes, you get tax benefits under endowment policies on premiums paid and the maturity amount under sections 80C and 10(10D) of the Income Tax Act. 1964.
