Claim Process Of Endowment Plan
The claim process is initiated by the beneficiary of the policyholder in case of the latters untimely demise:
- Inform the insurer about the incident soon. The claim form is then forwarded to the beneficiary.
- The claim form must be signed by the nominee. It should be accompanied by a statement from the last doctor who has checked the late policyholder. A certificate from the hospital authorities where the policyholder was treated is also necessary. Further, there should be a statement from a witness present at the cremation and a death certificate. If needed, the insurer should get the completed discharge voucher.
- In case of unnatural death, a police investigation report, an FIR, and a copy of the postmortem are needed.
- If the policyholder was employed, then the employers e-certificate is needed.
The Truth About Endowment Life Insurance Policies
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Eric is currently a duly licensed Independent Insurance Broker licensed in Life, Health, Property, and Casualty insurance. He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer. His background in tax accounting has served as a solid base supporting his current book of business.
Endowment life insurance is a specialized insurance product that’s often dressed up as a college savings plan. The endowment life insurance policy promises a risk-free, guaranteed return on a guaranteed date as long as you make the fixed monthly payments. What’s more, the cash value isn’t counted against your child’s financial aid eligibility. Could this be the college savings plan you’ve been looking for?
Let’s look at whether the stated advantages of these policies live up to their promises.
Salient Features Of An Endowment Policy
Endowment policies offer a whole range of features. Let us go through them, one by one.
Guaranteed savings no matter what – An endowment policy gives fixed returns. So, your financial goals and family’s future are always in safe hands
Dual Benefits – Endowment policies provide dual benefits of savings and life cover. Plus, the returns are tax-free so real returns are higher
Premium flexibility – Premium payment can be done on monthly, half-yearly, and on yearly basis
Zero risk – Endowment plans come with zero risks for you. As long as you pay premiums on time, all your benefits are safe. There is zero risk
Earn bonus – Endowment plans offer additional bonuses. The bonuses& 8 is the extra amount of money which a policyholder can get
No market risk – Endowment policies are non-linked. In these policies will not be dependent on
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What Are Endowment Life Insurance Plans
Endowment plans are life insurance policies that not only cover the individuals life in case of an unfortunate event, but also offer a maturity benefits at the end of the term. After a specific period of time- called maturity- they are designed to pay a lump sum amount. The insurance company will pay this assured sum to the endowment policy holders nominees in case of holders death or to the holder himself on a fixed date in the future.
Do Options Exist That Are Explicitly For Saving For College
Prepaid tuition and 529 savings plans are designed specifically to help with future college expenses. Prepaid tuition plans let you pay in advance and lock in current tuition prices for future education expenses. A 529 permits you to invest in stocks and a portion in bonds, gradually moving away from stocks as your child approaches college age. This strategy is similar to how you save for retirement.
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What Is Endowment Life Insurance Policy
- 25 March 2017 | 873 Views | By Mint2Save
An endowment policy is basically a life insurance policy which, apart from covering the life of the insured, helps the policyholder to save regularly over a certain time, so that he/she gets a lump sum amount on the policy maturity in case he/she lasts the policy term.
A life insurance endowment policy pays the complete sum assured to the beneficiaries if the insured expires during the policy term or to the policyholder on the maturity of the policy if he/she survives the term. Hence, it fulfills the dual necessity for savings and life cover under a common plan.
How does it differ from Whole Life Policy?
The difference is that endowments take a shorter coverage period and mature sooner, usually in 10-20 years, whereas the Whole life policies are meant to last for the insureds whole life and thus they mature when the policyholder touches the age of 95 or 100. It has a less probability that the whole life policies mature.
And, Endowments characteristically have relatively higher monthly premiums, the shorter the endowment term, the higher the premiums while whole life policies frequently have relatively lower monthly or annual premiums.
There is a fallacy very prevalent in the market today that a term plan is unusable, because if you live the term, there is no profit by way of a lump sum pay out.This is the way a term plan is made.
You live no payout.
You dont last your family is protected.
How your money is invested:
How Does An Endowment Plan Work
Endowment plans are similar to our regular insurance policies. They not only provide you with a life cover but also help you save on a regular basis. And once the policy matures with the given condition that the policyholder has survived the policy term, he/she will receive a lump sum amount. This amount can be utilized to meet financial needs like purchasing property, childrens education or retirement etc.
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Types Of Endowment Policies:
There are 3 types of basic endowment policies which one can choose from.
- Unit Linked Endowment – Under Unit Linked policies, the insurance premiums are directed into multiple units held under a specific investment fund which can be chosen by the policyholders.
- Full Endowment Under this policy, the basic amount ensured to be provided will be equal to the death benefit, right from the start of the policy. Depending on the speculated market-based appreciation, the final payout provided is comparatively higher.
- Low Cost Endowment This endowment plan has been introduced with the intention of allowing individuals to accumulate the funds which have to be paid after a specified time period, usually mortgage.
What Are Endowment Insurance Plans
An Endowment Plan an insurance product designed to help you meet your long-term financial goals.
While term plans only provide you with a life cover, Endowment Plans go one step forward and benefit the policyholder in two ways – they provide you with not only life insurance but also return on your investment.
Factors To Consider Before You Buy An Endowment Policy
Before you select an endowment policy, consider the following:
- You should have a steady and regular income. Endowment schemes are long-term commitments, so if you do not have a regular source of income, you may be in a situation in the future when you cannot pay premiums on time and the policy will lapse or get terminated.
- You should have a disciplined approach to investment/financial payments. If you are the kind of person that forgets to make premium payments, then it might be difficult to maintain an endowment policy. This is actually applicable for any kind of investment or insurance that needs fixed, regular payments. Financial discipline is an absolute necessity unless you are making single payments.
- Endowment policies are good for people who want to save but cannot spare huge amounts or pay attention to the market keenly. They are easier to manage than mutual funds and cheaper than ULIPs or growth insurance plans.
- You should choose a plan according to your age, income, how much you can save in a month/year, and your future financial goals.
- The older you are, the higher your premium and future needs might be.
- Let your income and monthly savings decide how much premium you would be able to pay towards an endowment policy.
- Make sure that you are choosing a plan that gives good returns and a sum assured plus bonuses that will cover your future needs. It would be ideal to choose a policy with a sum assured of at least 10 times your current annual income.
Documents Required To Buy An Endowment Plan
You can purchase an endowment plan either online or offline. The first step involved in purchasing the plan is to fill out the application and the proposal form. After filling out this form, you need to submit certain documents. Be sure that you have all the important documents ready that are necessary for buying the plan.
Given below is the list of documents requested by the insurance providers to carry out the purchase of an endowment plan. You can either submit these offline or through the companys website.
i.Passport Size Photographii.Age proof iii. Identity proof iv. Address proof
All these documents must be original. If any discrepancy is found, your application can be cancelled and you may face charges.
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Why Opt For Endowment Plans
Endowment life insurance policies have certain obvious benefits.
For starters, the policy holder has a pool of savings when the endowment insurance policy matures. He can either reinvest the amount or use it to enjoy life post-retirement. Thus, endowment policy is almost risk-free and offers a steady amount on a fixed date as long as the premium is paid.
You can also use this money for your monthly expenses, your child’s education or wedding, or even for a much-deserved vacation.
What Are Your Options If You Have An Endowment Policy
An endowment policy offers several options for payout:
- Wait for it to mature. You can keep paying into your policy until it matures, then get a lump-sum payment, even if youre still alive.
- Stop making payments. Some insurers will allow you to stop paying towards your endowment policy but still keep it until it matures. This means that both the lump sum you get when it matures and the payout your beneficiaries will get if you die could decrease over time.
- Surrender your endowment. You can cancel your policy before it matures and get a payout from your insurer. The amount you get would be much lower than if you wait for the policy to mature.
- Sell your endowment. Selling your endowment to a private investor or company can get you a bigger payout than your insurer would give you if you surrender it.
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What Is Endowment Insurance
Endowment insurance is a form of life insurance which pays out once it matures, regardless as to whether or not the insured is alive. This is one of the most costly forms of life insurance, and it can be used in a variety of ways. As with other types of investments, it’s a good idea to talk to an accountant or financial advisor before purchasing endowment insurance, to confirm that it is the best possible option. Endowment insurance is highly inflexible, which can make it a poor choice for people who are afraid of experiencing fluctuations in income or financial need.
When an endowment insurance policy is written, it is designed to expire in a period of time which can range between 10 and 30 years. The amount of the payout is determined by the amount of the premiums, and the shorter the contract, the most expensive the premiums. Many people settle upon a 20 year maturity date, which allows them to access the funds within a reasonable period of time, but will not be accompanied by premiums which are difficult to pay.
Endowment Plan Vs Money Back Policy
Both endowment plans and money-back plans are types of life insurance policies that offer both death and maturity benefits. But these plans have certain differences as well. These are given in the table below:
|You can take a loan from your endowment plan after the policy acquires a surrender value||A loan facility is not available in the case of a term plan|
|Suitability||If you want to save money for a long term goal||It is a necessary plan if you want to protect your dependents at an affordable price|
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Five Advantages Of Buying An Endowment Policy
Endowment plans are insurance plans that provide guaranteed benefits in the form of a total sum assured as well as different bonuses to the policyholder at the maturity of the plan’s term or to the policy holder’s nominee in the event of her/his death before the term maturity. Endowment plans are essentially insurance vehicles that also provide the investor with a savings option. An endowment plan provides principal plan benefits, such as an amount assured to the policy holder’s nominee in the event of the policy holder’s death during the policy term, and also entitles the policyholder to maturity bonuses if she/he survives the policy period.
Benefits Of Endowment Plans
Following are the benefits avaialable under a Endowment plan:
- Insurance protection during the insurance period is provided. When the policy matures, it gives a lump sum payout
- It serves you with a dual purpose because it not only acts as an insurance policy but also provides you with long-term benefits through savings.
- Under Section 80C, 10 of the IT Act, 1961, you get tax deductions/exemptions for all premiums, maturity, and final payouts.
- As a comparatively safer choice than other forms of investment, they are considered.By selecting additional riders such as critical illnesses, premium waiver, accidental death benefit, and so on, you get an option to improve your policy.
- Often, insurance providers announce bonuses. The benefit here is the additional amount of money attributed to the proceeds, which is distributed from an insurer to a policyholder.
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Maturity Benefits And Death Benefits
An endowment plan is a one-of-a-kind investment choice since it promises you advantages as a maturity benefit if you survive to the policy’s expiration date. Furthermore, if you die during the duration of the policy, your nominee will receive the sum guaranteed, as well as other benefits, as a death benefit. In this case, endowment plans give both death and maturity benefits.
Flexibility In Premium Payment
You are given full flexibility to choose the mode and frequency of which you pay your premium. You can pay the life insurance premium on a monthly, quarterly, half-yearly or annual basis as per your preference.
You can also select the limited payment option, which allows you to pay your premium for a limited time and enjoy the benefit later.
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How To Choose An Endowment Policy
The market is flooded with different types of endowment policies. But there are several factors an individual should keep in mind while choosing the right endowment policy. Factors like income, an individuals needs, current life stage, and risk appetite should be considered while choosing an endowment policy.
The cost of the premium is also the deciding factor as premium of endowment plans are costlier as compared to other investment plans. Also, other factors to keep in mind would be the insurance providers track record in terms of the bonuses, customer service provided by the insurer, their claim settlement ratio, financial status of the insurer, etc.
In simple terms, you should buy an endowment policy which is simple and does not come with features and benefits which are difficult to comprehend.
Security Of A Life Cover
You can choose your life insurance cover before buying the endowment policy. This is the amount that will be provided to your family if you pass away during the term.
You can also choose your riders in the policy. Factor in all your familys future needs before deciding on a suitable financial cover.
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Why Choose Endowment Life Insurance Are They Just For Saving For College
These aren’t college savings plans, despite being marketed as such. These are simply life insurance. The payout from the accumulated cash value can be used for anything without penalty.
One benefit is that unlike many life insurance policies, you don’t need to submit to a medical exam to qualify for an endowment life insurance policy.
Who Should Buy An Endowment Insurance Policy
Everyone wants to have a risk-free, guaranteed return investment as a part of their financial portfolio. Thus, an endowment plan must be bought by individuals who want to:
- Secure the financial future of their family and dependents
- Create a financial cushion to fulfill the long-term investment objectives
- Ensure goal-based savings
However, such regular premium plans must be purchased only when an individual is looking forward to a steady flow of income in return for the regular premium paid. As endowment policies are long-term in nature, the longer one invests in these plans the more savings one can accumulate in the long term. Endowment policies offer a disciplined means of saving money for future needs. Moreover, it also covers life risks and takes care of the future financial needs of the family even in the absence of the breadwinner of the family.
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