What is the Right Time to Go Ahead for an Endowment Plan?

Life insurance has become an ultimate necessity in a person’s life. When you buy life insurance online policy, you cover up your life and get insured to manage your family’s financial requirements under uncertain events like death, critical illness or any disability that can affect you. The policy will be a set agreement for a lump sum payout on the maturity of the plan. There are different kinds of life insurance policies. An endowment plan is one important type that has varied benefits. The type of riders you choose and the age at which you start with the plan is very important. Let us understand the concepts better in this regard.

What is an Endowment Plan?

An endowment insurance policy is a type of life insurance policy with an insurance cover and savings benefit. According to the policy, the policyholder can save a particular amount regularly and get a lump sum amount when the set period matures. The amount can be used for post requirement expenses, a child’s education and other personal commitments such as buying a house or car. If the policyholder dies due to an uncertain incident, the family members will get the sum assured for handling their financial requirements in the future. Therefore, this type of plan will certainly ensure dual benefits.

When should you buy an Endowment Plan?

The best time to invest in an endowment savings plan is when you are younger, probably as soon as you start your career. It is only at that stage; you can get maximum benefits from the plan. Let us go through these benefits:

1. There are two types of Endowment Plans, namely Profit and Non - Profit. Profit Plans ensure a fixed sum assured on maturity and bonuses declared by the Company during the entire tenure. When you start investing early, you can accumulate large amounts of such bonuses. The Non – Profit Plan does not receive any portion of the bonuses.

2. The payout for these plans will be higher in terms of returns, and your family will be able to manage their financial commitments later in your absence.

3. When you start early, before you plan other personal commitments, you can always allot a regular premium amount and get used to paying it. You can afford to invest regularly, like monthly, quarterly or yearly.

4. Under Section 80C and Section 10D of the Income Tax Act 1961, you can get tax deductions and exemptions, respectively. Investing early will ensure better tax benefits.

5. You can choose to consider different premium rates before you start the regular payments. It should be consistent and affordable throughout the investment tenure.

6. As the plans are featured as long term, the longer the policy tenure, the better is the overall profit advantage.

Endowment Plans are thus important and should be availed at early stages in your life to ensure a considerable lump sum amount for your family’s financial security, tax savings, and a corpus amount over a long period. You can get disciplined at saving and investing better. There are many different types of Endowment Plans. You can choose to add as many riders like accidental death, disability, critical illness etc. If there is financial inconsistency in getting your salary regularly or there is no steady flow in your income, you can always opt for a flexible premium option. However, investing regularly will help you get better long-term benefits. Decide on your financial goals, affordable budget and risk factors before considering the best endowment plan. Always opt for a plan that is easy to understand and with no complicated features. There are options to avail such policies online without any difficulties. If there is a safe and definite way to investing, it is the Endowment Plan.