An endowment plan is a type of life insurance policy that has the combined beneficiaries of both insurance and investment plans. Endowment policy provides us the benefits of both savings and coverage. This plan gives us a lump-sum amount including the amount which we were saving on a regular basis . On account of the policyholder’s death , the beneficiaries will get the money after a certain period with all due benefits which occurred in between periods. It is valid and applicable only for a certain period. It not only provides the regular benefits of a standard health insurance policy but also gives us extra benefits like educational endowment, marriage endowment, etc.. . Endowment plans are a little bit costlier compared with other plans.
TYPES
Unit Linked Endowment plan
This plan is best suited for people who expect a high return on investing money. The final money that returns may vary depending on the volatility of the market. In this, a part of the investment amount is used for buying funds. And the second part is used for providing coverages and for savings.
Full profit Endowment plan
Full profit or with profit endowment plans makes us earn during the investment periods. The insurer will pay an assured sum to the policyholder. After a certain period, a huge amount is returned to the policyholder . The sum is greater than the assured amount of the insurer.
Low-cost Endowment plan
In this policy, the amount of premium pain is comparatively lower than other plans . The main aim of this policy is to increase the premium amount. This plan is best suited for paying loan amounts. On the demise of the policyholder , a minimum part of the amount will be returned to his nominees.
Non-profit Endowment plan
This policy is suited for a person who wants life coverage . This plan doesn’t give any profit to the policyholders . It just gives a lump sum amount once the policy attains its maturity state.
Money-Back plan
Money-back plan is a life insurance policy that gives a particular amount at regular intervals instead of giving a huge amount at the time of maturity or death of the policyholder. This helps us to protect our lives along with beneficial investments. Those who wish for a protected life should opt for this plan. This plan is helpful to rectify your short-term problems like paying college fees or rent etc. This small return will help the policyholders to clear the extra expenditure and makes you focus on bigger goals.
By considering these examples we can see that in order to fulfill your short-term goals you can use a money-back policy. It gives us returns at a regular interval . But for a long-term plan , it is better to choose an endowment plan which gives a large amount at the end .So choose your correct investment objective before choosing your plan. Both plans are good, it only depends on your goal for investment.
