What is an Endowment Plan?
Simply put, an endowment plan is a life insurance plan that offers both death and maturity benefits. If the policyholder dies during the policy term, the assured sum is given to the nominee. However, if the policyholder lives through the policy term, a lump sum maturity benefit is given to the insured upon the end of the policy tenure. The most striking feature of an endowment policy is that it offers you the dual benefits of life insurance coverage plus savings.
Endowment Plan Premiums:
The endowment plan premium will depend directly on the sum assured that you have opted for. After a specified number of years, you may be expecting a certain amount in hand, and so, in order to reach that amount, you would have to make regular premium payments. Use an online investment calculator to see how your endowment plan premium will affect your sum assured.
To understand more about endowment plan premiums, let us now take a look at the various factors that may affect them.
Factors Affecting Endowment Premium Value of Endowment Plans
Like every other life insurance plan, endowment plans also require the insured to pay the premiums as per the policy's terms and conditions. However, the endowment plan premium may differ from individual to individual based on factors like-
1. The sum assured you choose
In case of his/her demise, the amount that the insurance company promises to disburse to the family of the insured is the sum assured in an endowment plan. The higher the sum assured, the higher will be the premium charged, depending upon the terms and conditions of the policy.
2. Your age
Age plays a significant role in deciding your premium, and the older you are, the higher your premium can be. So, getting yourself a life insurance as early as possible may be considered.
3. Your gender
Studies say life expectancy of women is higher than men1. Life insurance companies may sometimes apply different standards of health for men and women, considering certain markers of health. That said, your gender may have an impact on the premiums2.
4. Your lifestyle habits
People who smoke or drink are sure to pay a higher premium for life insurance plans in comparison to non-tobacco users. This is because tobacco poses greater risk to life.
5. Your medical well-being
Some people already have underlying medical conditions when they opt for a life insurance plan. In such a case, the existing medical condition may have an impact on the premium payable.
6. Bonuses you get
There are two broad categories in endowment insurance plans, participating and non-participating. In a participating policy, the insurance company shares its profits with the policyholder in the form of bonuses, and thus such policies may require you to pay a comparatively higher premium.
7. The add-ons that you choose
Add-ons are the extra coverage that you add to your endowment plan on payment of additional nominal premium. For instance, critical illness, waiver of premium, hospital cash benefit, etc., are some popular add-ons. If you opt for them, the premium also increases.
Conclusion
If you are planning to opt for a disciplined and systematic way of building a corpus, an endowment policy might be the way to go ahead. For your goals, such as retirement, children’s higher education or wedding, etc., you may choose an appropriate plan that offers the twin benefits of savings and life coverage.
FAQs:
1. Can I get a loan against my endowment policy?
Yes, if you have existing endowment plans you may be able to get a loan up to a specific amount depending upon the policy terms and conditions. However, insurance companies may have different terms, so you should find out about this from your insurance agent or insurance company.
2. Who should invest in an endowment policy?
Anyone can purchase an endowment plan. However, those who wish to purchase life insurance that also gives you the leverage of investment and maturity benefits may go for an endowment plan.
Ref:
1https://www.india.com/news/india/economic-survey-2022-women-expected-to-outlive-men-in-india-5215590/
2https://www.investopedia.com/gender-and-insurance-costs-5114126
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