Is Buying an Endowment Plan (Whole Life Insurance) a Good Idea?
About endowment plan
An endowment policy is a type of life insurance that not only covers the life of the policyholder, but also helps the insured collect a corpus amount that may be availed of at the time of maturity. The accumulated amount may be used to meet various personal financial goals.
Benefits of an endowment plan
Before opting for an endowment plan, it is imperative to understand the various benefits it has to offer. Following are five major advantages of a whole life insurance policy.
1. Provides life cover
Life is unpredictable. In case of an unfortunate event of death of the policyholder, the family may be financially burdened. An endowment plan pays the sum assured to the loved ones in case of such an unfortunate event during the policy term. This amount acts as an income replacement if the policyholder was the sole breadwinner of the family.
2. Offers a disciplined route for savings
Premiums towards your endowment plan need to be paid either monthly, quarterly, half-yearly or annually, according to the terms and conditions of your policy document. This inculcates a habit of regular savings in you. You pay your premiums on time to ensure that you get a lump sum at the time of maturity, which may, in turn, be used during any financial emergency.
3. Provides bonus
An endowment plan offers an annual bonus. This amount is given out as a percentage of the sum assured. In case of death of the policyholder during the policy period, the nominee is entitled to receive the sum assured along with the total accumulated bonus. Alternatively, upon survival at maturity, the policyholder may enjoy both the sum assured and the additional bonuses accrued during the policy period.
4. Helps to meet various life goals
Since endowment plans offer the accumulated amount once the term matures, you may use the amount to meet your personal long-term goals. Besides keeping it as a safety net to meet your expenses during your golden years, these may include your child's higher education, down payment towards a new house, or buying a new car.
5. Offers tax benefits
One of the best reasons to invest in an endowment policy is to reduce your tax liability. You may enjoy tax benefit on the premiums paid towards your policy, under Section 80C of the Income Tax Act, 1961. Besides, the death benefit amount is also exempt from tax under Section 10D.
Although endowment policies are excellent investment instruments that offer financial security for the present and for the future, they are costlier than term plans. Term plans offer you a larger cover at a lesser price. In case of death of the policyholder, the family members may get the sum assured, but at the time of maturity, term plans do not give any amount to the policyholder.
Income Tax Slab 2021-22
February 17, 2020
Income Tax Return Guide - Details You Should Know
November 07, 2016
Best Tax Saving Investment Options in 2022 (FY 2022-2023)
November 08, 2016
Subscribe to get the latest articles directly in your inbox
14 Best Investment Options In India
October 30, 2018
Short Term Investments: Top 11 Short Term Investment Options For 2022
November 08, 2016
Insurance vs Investment - Did You Get the Right Financial Plan?
November 05, 2018
Popular & Recent Articles
How to Plan for Retirement as Per your Age
"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.
Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Email: [email protected], Tel No: 1800-266-9777 (10 am to 7 pm). The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited (“HDFC Limited”) and is used by HDFC Life under an agreement entered into with HDFC Limited.
For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.
|BEWARE OF SPURIOUS PHONE CALLS AND FICTIOUS/FRAUDULENT OFFERS
- term insurance plan
- savings plan
- ulip plan
- retirement plans
- health plans
- child insurance plans
- group insurance plans
- long term savings plan
- fixed maturity plan
- monthly income advantage plan
- income tax calculator
- pension calculator
- bmi calculator
- compound interest calculator
- term insurance calculator
- income tax
- tax saving investment options
- best investment plans
- benefits of term insurance calculator
- what is term insurance
- why to invest in life insurance
- tax planning for salaried employees
- how to choose best child insurance plan
- tips for buying retirement plan
- 1 crore term insurance
- importance of saving
- short term saving plans
- types of investment in india
- investment declaration