5 Points to Keep in Mind Before You Buy an Endowment Policy

Byshaheen shaikh

A type of life insurance policy with the added benefit of lump-sum pay-out after maturity or on death is the endowment policy. It can be considered a good strategy if you wish to avail the dual benefit of financial protection and wealth accumulation. 

While this is the meaning of an endowment plan, know whether you should consider buying it or not. So, should you opt for one?

Who Should Buy Endowment Insurance?

  • If you are looking for long-term financial protection for your family along with a way to save money for specific milestones.
  • If you have a steady income stream, but require a lump-sum amount after a period of time.
  • If you are conservative or risk-averse when it comes to financial planning.
  • If you are looking for investments that offer tax benefits.

Here are 5 essential points to keep in mind before you make a decision.

5 Things to Consider Before Choosing an Endowment Insurance Policy

Consider the Type of Endowment policy

There are several types of endowment insurance policies. Choose one after careful understanding of terms and conditions, and also after considering your long-term goals, income, and risk appetite.

  • Unit Linked plans
  • Non-participating endowment plans (traditional)
  • Low-cost endowment policies
  • With profit plans

Consider Affordability of the Plan

Use an endowment plan calculator to check the accurate amount of premium you will have to pay. Consider a plan that will not burden you financially every month. You can also choose yearly, half-yearly, or monthly frequency options.

Check the Company’s Track Record

Your insurance company should have a good track record in respect to bonus payments, customer service, and claim pay-out ratio. Also, check for convenient enrolment and claim filing process online. You need to make sure that in case of an eventuality, your loved ones have all the support they can get from the company.

Consider Easy to Understand Policies

Try to avoid endowment plans with complex features. You should be able to fully understand the terms and conditions of the plan to make an informed decision. Make sure to read the fine print thoroughly.

Look for Rider Options

Consider the flexibility of your plans with rider options. For instance, you can avail of an accident and permanent disability benefit for protection against unfortunate events. Moreover, along with the assured rider sum, the policy and its benefits continue. You can also choose to opt for a rider sum in the event of accidental death. Along with this rider sum, the policy will pay out the death benefit as well.

An endowment insurance plan could be a good option for someone who finds it difficult to instil a savings habit. Such plans ensure that you can save for a comfortable future as well as provide protection to your family, in your absence. Do check several options in the market before making a decision. Always choose a provider with a good market reputation and financial stability.