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Life Insurance
Endowment plans: Where insurance meets investment
Are you looking for a financial option that saves and secures at the same time? If yes, endowment plans can be something to think about. Most people find it hard to take care of daily expenses and long-term aspirations. That’s where endowment plans step in; they assist by fulfilling two jobs at once. They provide life cover for your family and build a lump sum for your future.
Due to this two-in-one advantage, endowment plans are favoured by individuals who desire security and smart planning.
How does an endowment plan work?
Endowment policies are simple. To begin with, you pay regular premiums for a set period of time. Then, if you complete the policy term, you receive a lump sum payout. But, if something untoward happens to you in the meantime, the sum assured goes to your family. This simple method keeps your family secure and your money increasing every month.
Key features at a glance
| Feature | What it means for you |
|---|---|
| Life cover | Money for your family if needed |
| Lump sum at maturity | Helps pay for big future expenses |
| Regular premiums | Helps you save in a disciplined way |
| Tax benefits | Possible savings under Section 80C of Income Tax Act |
Each of these features is designed to give you confidence in your financial future.
Are you still unsure how it works? Let’s understand by considering the following scenario-
Let’s take the example of Priya, a 35-year-old working in Mumbai. She chooses an endowment life insurance plan with a sum assured of Rs 10 lakhs and a policy term of 15-years. She pays a monthly premium of Rs 5000, which amounts to Rs 60,000 per year. When the plan matures, Priya will receive a lump sum plus any bonuses declared by the insurer over the years that could help pay for her daughter’s college or buy a new car. If anything happens to Priya during these 15 years, her family gets the full sum assured plus any accrued bonuses. So, her plan works as both a protection and a savings tool.
Conclusion
Endowment plans offer a balanced way to plan your finances. They give you the peace of mind that comes with life cover and the satisfaction of building a future fund.
Disclaimer: This article is for information purposes only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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