Types of Endowment Policy in India

What is an Endowment Policy?

One kind of life insurance policy that combines the advantages of insurance protection with savings is the endowment policy. In order to get a lump sum payment at the policy's maturity, endowment plans assist the insured in routinely saving over a certain length of time. In the event that the insured lives through the policy's whole term, the maturity amount is paid.

However, in the terrible event that the insured passes away while the policy is in effect, the beneficiary or nominee of the insurance will be paid the sum assured as a death benefit, together with any bonuses. In addition, endowment policies aid in building a financial buffer for the future so that both short-term and long-term financial goals may be accomplished.

Types of Endowment Policy

Unit Linked Endowment Plan

This fixed-term savings plan also offers life insurance as a bonus. The premium paid by the insured under this plan option is divided into several units held under a specific investment fund of the insured's choosing. The market performance of the fund has a direct impact on the return on investment. This plan choice is most ideal for people who are strong risk takers and desire high returns on their investments.

Full/With Profit Endowment 

The basic guaranteed amount (sum assured), which is equivalent to the death benefit, is given to the insured individual under this plan choice. This sum is assured right away when the insurance is purchased. Additionally, the insured receives a final pay out that is far greater than expected because it includes both the whole sum promised and an extra bonus.

Low-Cost Endowment

This kind of endowment plan is especially made to assist the insured in building up a fund for the future that must be paid after a set amount of time. For the repayment of loans, mortgages, and other obligations, low-cost endowment plans are typically employed. The target amount is paid to the insurance beneficiary / nominee as the minimum sum assured in the event that the insured passes away within the policy term.

Non-profit Endowment

A guaranteed amount is paid to the policyholder as a maturity benefit or to the beneficiary of the policy as a death benefit in a non-profit conventional endowment insurance.

Guaranteed Policy

With endowment insurance, you may be sure that regardless of whether you live to see the insurance policy's maturity date or pass away before it does, a certain amount of money will be handed to you or your dependents. An endowment policy will pay its face amount to the owner on the "maturity date" or, in the case the insured passes away, to the beneficiary or nominee of the life insurance policy. It is not a given that the policy's incentives will be awarded. Consequently, with an endowment policy, you receive both guaranteed policy benefits and non-guaranteed bonus.

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