Most of the time, our monthly source of income may only be enough to cover our daily expenses and to save for the future may have to wait for a later date. However, if you choose a savings plan such as an endowment life insurance plan, creating a fund for your future goals can become easier.
Defining an Endowment Plan
An endowment plan is a money-saving plan that helps you save funds for various long-term goals such as planning your children’s further education, marriage, the purchase of a new house or a comfortable retirement fund. Apart from serving as a savings tool, an endowment plan also provides the advantage of a life insurance cover for you and your loved ones so that in case of an eventuality, your beneficiaries need not worry about the finances.
Through an endowment plan, you can follow a disciplined approach to building long-term savings. It is a good plan for individuals who wish to use their income flow to create a financial safety net for a later date.
Four things to understand before buying endowment life insurance:
- Your requirement from the plan:
Before purchasing an endowment plan, examine and understand your financial situation. If you don’t have a savings plan that would provide you with financial safety in your retirement years, then an endowment policy is one of the best options. With this plan, individuals will get significant returns, which can benefit once they have left the workforce. Endowment policies provide individuals with insurance coverage, along with saving opportunities.
- The features you are looking for:
Endowment plans are good life insurance policies that provide individuals with life coverage and a chance to save in a disciplined way over a specific period so that the policyholder can get a lump-sum at maturity. The plans provide flexible premium payment modes – single-pay as well as regular payments. You can also choose the premium payment frequency – monthly, quarterly, half-yearly or yearly. You can use the policy to avail of a loan in an emergency. However, it is important to find the right life insurance provider and check for the features they are offering before buying an endowment plan.
- The right circumstances for purchasing the plan:
Every individual must have a plan that will provide them with risk-free assured returns. Endowment plans help individuals ensure their family’s financial stability, accomplish personal financial goals, and build a savings corpus to achieve investment objectives over a long period. Endowment plans are advantageous as they are long-term plans and provide good results over a long tenure. But you must purchase the regular premium plan only when you have a stable income flow.
- The necessity of the endowment plan:
One of the main reasons for purchasing an endowment plan is because they allow individuals to save their funds in a disciplined way. This method helps them take care of their financial needs. The individual also gets insurance coverage and the chance to build their financial corpus for the future. While the plan may provide low returns, the investment risk involved in the plan is also low. Apart from this, policyholders can also get tax-benefits on the returns earned from the plan. They are optimal for individuals looking for low-risk plans since it also provides maturity benefit and the death benefit.
However, before you purchase the plan, you must consider the insurer’s track record, claim settlement ratio, financial stability and customer service. Endowment plans are considered safe options for long-term financial planning. Before purchasing this smart life insurance, it would help if you considered the points listed above, as it would help you buy the most suitable plan for you.