What Is the Right Time to Buy an Endowment Plan?

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Endowment Plan

If you are an impulsive spender, you might need to opt for an endowment plan. Such a policy will help you to save money every month. With an endowment savings insurance plan, you can save money over a certain period and then get a lump sum amount upon the policy’s maturity.

Also, as per the terms and conditions of an endowment plan you choose, you can ensure payment of the sum assured as per the mode of your choice. For instance, the Tata AIA life insurance policy allows you to choose from a lump-sum payment or regular monthly income or both for death payout as well as maturity benefits.

While you can buy an endowment plan at any age, it’s better to purchase one while you are still young. This way, you can avail several additional benefits. Let’s dive a little deeper into such plans and the best time to buy one for yourself.

Things to Keep in Mind While Purchasing an Endowment Plan

If you have already decided on buying a savings investment plan or an endowment plan, here are a few other benefits of endowment policy in India:

  • Buy Early: The returns of the endowment plans are large, and hence, your family will be able to manage their financial goals with its payouts even in your absence. You can assign a regular premium amount and keep paying the same every month/quarter/year. So, when you start early, you will be able to better arrange your personal monetary commitments.
  • Assured Returns: In case of your untimely death, an endowment plan can provide financial security to your dependents, and act as a corpus for any of their future monetary needs. The returns of investment in such savings insurance plans are assured, whether in case of death benefits or survival benefits.
  • Low Risk Level: The endowment plans are safer and a much better investment option for the insured. These plans have a very low to moderate risk, keeping in mind the recent endowment patterns. An endowment plan can also serve as a critical illness insurance plan in India if you opt for the relevant riders. This allows you to be stress-free about paying a lump sum amount during the treatment period. So, even risking your own savings is low.
  • Tax Benefits: The endowment policies offer great tax benefits on premium payments. The premium amounts that you will pay for your endowment plans will be deductible under Section 80C of the Indian Income Tax Act, 1961. Moreover, the maturity benefits, bonuses, additions and death payout are tax-exempt under Section 10(10D) of the Act.
  • Add-on Coverages: Apart from the basic coverage that such plans will provide you with, you can also choose from a wide range of add-ons and rider benefits, including critical ailment coverage, disability coverage, accidental death coverage and so on.

Conclusion

Endowment plans are necessary for a secured financial future of an individual. If you can get one plan early in your life, you will be able to secure a handsome amount for your family’s future financial health. Also, you will be able to save on taxes and improve your investment discipline. These plans are available in various forms and shapes. Hence, it would help if you researched well about the options available before opting for one. In case of financial inconsistency every month, if you do not receive your salaries on time, you can also go for a flexible premium option. Always remember, investing regularly will assist you in achieving a superior long-term result.