A Quick Guide to Endowment plans.

Endowment plan? What’s that?

An endowment plan provides life insurance coverage over a specified period of time, for instance, 20 years. At the end of this period, the policy matures  and you’ll receive a lump sum payment  in addition to any other bonuses or guaranteed additions due to you. You can also cash it in at any time and receive a surrender value depending on how much you’ve invested in the plan

Who Should Get an Endowment Plan?

Anyone who wants insurance coverage and a savings plan. Many people purchase  endowment plans that  mature when they reach retirement age to supplement their income.

What types of endowment plans are there?

There are various types of endowment plans that  you can choose from to suit your budget and needs.  Broadly speaking,  here are a few common  ones in the market:

Endowment Plan With Survival Benefits

These plans usually offer a survival benefit in the form of guaranteed cash payments  over the policy term. These payments  are usually equivalent to a percentage of the basic sum assured of the policy, and paid out at regular intervals (eg. annually). On top of that,  you may also receive cash bonuses  if the Company performs well. The basic sum assured is paid out upon maturity of the policy.

Why should I get  an endowment plan instead of regular insurance?

Regular insurance plans focus on protecting you against life’s unexpected events, while endowment plans are meant  to provide basic insurance coverage combined with a savings element. Endowment plans are best for those who want a form of regular savings with the potential for higher returns than conventional savings.

Normal Endowment Plan

These plans are similar to endowment plans with survival benefits, without the guaranteed cash payment feature.
 

As such, they are suitable for those looking for a more
affordable plan that offers both protection and savings.

Investment-Linked Endowment Plan

Premiums are invested in unit funds, and the total investment value of the policy depends on the current value of the units in the policy.

 

Typically, the total investment value is paid out when the policy matures.

How does an endowment plan boost my savings?

For one, endowment plans are long-term  savings plans that  act as a form of “forced  savings” because  a fixed amount is paid for premiums on a regular basis. This ensures that  money is saved instead  of spent on other things. Plus, additional bonuses that come with endowment plans may help increase the maturity benefit, leading to a bigger payout at the end of the policy term.

Speak to me should you want to know further about endowment plans!

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