Endowment Policy

An endowment policy is a type of life insurance plan that combines insurance coverage with savings. It provides financial protection to the policyholder’s family in case of their untimely death during the policy term, while also offering a lump sum payout if the policyholder survives until the maturity of the policy.

Key Features of an Endowment Policy:

1. Life Coverage: Offers a death benefit to the nominee in case of the policyholder’s demise during the policy term.

2. Maturity Benefit: Pays a lump sum (sum assured + bonuses, if any) upon maturity if the policyholder survives the term.

3. Savings Component: Helps in building a disciplined savings habit, as premiums contribute to a corpus over time.

4. Low Risk: Endowment policies are considered low-risk as they are not directly linked to market performance.

5. Bonus Additions: endowment policies offer bonuses (e.g., reversionary bonuses) based on the insurer’s profits, which enhance the payout.

6. Tax Benefits: Premiums paid and payouts received are often eligible for tax exemptions under applicable laws.