Different Types of Endowment Plans
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Different Types of Endowment Plans

 Different Types of Endowment Plans
  • 7th Jul 2022 |
  • 2,608

“If you buy things you do not need, soon you will have to sell things you need”, quoted by the famous American business magnate, Warren Edward Buffett.

Do you find it difficult to cut your unnecessary expenses? This might be because you have a habit of overspending, which means spending more than you can afford. Overspending can keep you from meeting your financial goals by crippling you financially. An Endowment plan is intended for you if you find it challenging to lead a disciplined life and control your expenses. Keep reading to understand an endowment policy and the types of endowment policies.

What is an Endowment Plan?

An endowment plan is a life insurance policy that ensures the financial security of the policyholder and their family in case of any unfortunate event. An endowment plan not only takes care of your loved ones after your unfortunate demise but also helps you build a corpus to meet your long-term goals, thereby fulfilling the dual objectives.

Benefits of an endowment plan

In case of policyholder’s unfortunate demise, a guaranteed death benefit is provided. The sum assured is provided to the beneficiary and the bonus (if any).

1. You can choose to pay on a yearly, half-yearly, quarterly, or monthly basis or even in a single payment. Hence, the policy provides flexibility for the payments of the premium.

2. An endowment plan does provide not only the death benefit but also survival benefit. The maturity amount acts as a financial cushion for your financial needs in future.

3. Endowment plans are low-risk savings plans for investment as they offer guaranteed matured benefits.

4. One can make the endowment plan more effective by purchasing the rider benefits. Several rider plans are available in the financial market, such as accidental death rider, critical illness cover, hospital cash benefit, etc.

Types of Endowment policy

Now that you have understood the meaning and objectives of the endowment policy, you should explore all the options available.

Full-Endowments

Also known as With-profit Endowments, Full-Endowment plans provide you with the death benefit, equal to the sum assured, guaranteed from the beginning of the policy. The final payout is usually higher than the sum assured as it is the total sum assured amount and the bonus.

Low-cost Endowment

The main objective of this policy is to accumulate a fund for future needs due after a specific time, such as repayment of the mortgage, loans, etc. As the name suggests, the premiums and the sum assured are comparatively lower.

Unitised With-Profit Endowment Plan

Under this policy, the premium paid by the insured is suited for the people who wish to get dual benefits of ULIP’s earning potential and guaranteed returns. The capital market determines your funds’ performance, but the guaranteed returns mitigate the market’s volatility. Hence, you can gain higher returns with low-risk investments.

Non-Profit Endowment

In a non-profit endowment policy, the promised sum assured amount is paid to the insured person at maturity or to the beneficiary in case of the policyholder’s unfortunate demise as a death benefit. There are no additional benefits, so the payout amount remains static. It ensures the financial security of your family in your absence.

Unit-Linked Endowment Plan

This is the right fit for those who have a high-risk appetite and wish to gain higher returns. Unit-Linked Endowment Plan also provides the benefit of life insurance. You can go for this policy if you can afford to get higher returns.

An endowment policy is an excellent option if you want guaranteed benefits with a low-risk investment. It is an investment tool which is a long-term plan and promises a good return after a long period along with the additional benefits. Endowment policies provide financial security for your future needs and your loved ones in your absence and help you lead a disciplined life. You can develop a habit of saving and also increase the value of your savings by investing in different types of endowment policies.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

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