What is Endowment Plan?

Endowment Plan Meaning
Endowment plan is a type of life insurance coverage which is applicable only for specified period. Like any other Life Insurance, here also you will get assured sum after maturity and in case of death of the policy holder the nominee will be benefited by the amount. In this plan the specified period will be ten, fifteen, twenty years or up to certain age limit for which you have agreed.
Endowment Plan= Insurance + Savings

Types
Types of Endowment policies popular in the market are as follows

Unit-linked endowment
This is a fixed term saving plan with an opportunity of life coverage. In this plan your savings can be invested in market shares thus the return you get from this completely depends upon on the performance of your investment. 

Full endowments
In Full Endowment plan at the start of policy you will be assured with basic sum which is also equal to death benefit. However the amount you get at the end of maturity depends on the annual growth rate.

Low cost endowment
In this endowment plan the anticipated future growth rate of the amount will meet the target amount and the guaranteed life insurance element. In case of death, this target amount will be paid as the minimum assured sum..

Unitised with profit endowment
This is a form of profit endowment where the value of units is calculated annually and this value is guaranteed in order to form a minimum return amount. This guaranteed sum remains unaffected from the market risks thus giving you relief

Endowment Plan Is Ideal for you
·         If you are looking for a plan with the dual benefit of investment and insurance.
·         If you are looking for a long term investment and want to receive a lump sum amount at the end of some years or maturity.
·         If you like to pay your premium in short period and want to enjoy the benefits from the plan over the policy term.
·         If you are looking for an investment which is tax free then this is good option. As per section 80C of Income Tax Act you can enjoy tax benefit on the annual premium and as per section 10D death claim is completely tax-free. 


Source: tips.thinkrupee/articles/what-is-endowment-plan.php

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