Buying an endowment plan? Keep these 5 things in mind first

February 09, 2018 12:51 PM

An endowment plan is basically a life insurance plan that offers the required cover along with the opportunity to save on a regular basis.

Buying an endowment plan? Keep these 5 things in mind firstAn endowment plan provides a chance to save your money in a very disciplined manner that fulfills the future needs easily.

If you are an impulsive person and spend a lot of money without planning in advance, then an endowment plan may be suitable for you. The reason being that an endowment plan offers a disciplined way for long-term investments. Investing in an endowment plan is really very effective, especially for individuals with a regular flow of income.

However, there are a few things that you must consider while buying an endowment policy.

1. Features of an Endowment Plan

An endowment plan is basically a life insurance plan that offers the required cover along with the opportunity to save on a regular basis so that you can easily receive a lump-sum amount on the maturity of the policy. Consequently, with the help of this maturity benefit, you can easily deal with the various financial needs such as children’s education, saving for retirement, buying a house, children’s marriage etc.

Under an endowment policy, the policyholder not only gets the maturity benefit, but also comes out with the option of the full sum assured payment to the beneficiary. Thus, we can say that an endowment plan is an effective plan which provides a lump sum maturity benefit.

The major benefit that you will get under an endowment plan comprises of financial security, tax benefits under section 80C and (10D) of the Income Tax Act, great saving option, loan facility against the policy.

2. Who should consider buying an Endowment Policy?

As discussed above, an endowment plan is basically a great option when it comes to saving for those who spend a lot without managing financial backup. They might be looking for a specific amount in hand and after a fixed period of time in life (mainly after retirement). Moreover, an endowment policy provides a great way of saving. Any person who wants to look for long-term financial needs can easily opt for an endowment plan which offers the dual benefits of life insurance along with several additional benefits.

3. What are the right conditions for buying an Endowment Plan?

As per the financial needs of a person, everyone looks for a risk-free assured investment option. An endowment policy covers three areas comprising of protection, financial stability and achieve investment objectives within a certain period of time.

If you are planning to go for a regular premium plan, then you must make sure that you are purchasing the same only when you have a steady flow of income so that you can pay the premium regularly. There is no doubt in saying that endowment plans are a beneficial thing and they offer returns for a long period.

4. Why go for Endowment Plan?

An endowment plan provides a chance to save your money in a very disciplined manner that fulfills the future needs easily. Apart from the basic advantages, under this plan, the policyholder gets a lifelong coverage along with the chance of building a corpus for a secure future.

An endowment plan may give you lower returns, but the investment associated risk is very low as well. Under endowment policy, the policyholder can also avail tax benefits on the returns. These features make endowment plan more preferable for risk-averse investors as it also provides maturity benefit apart from death benefit offered to the nominee of the policy in case of an eventuality.

5. What Should a Person Keep In Mind While Buying Endowment Insurance?

As you could get a much broader choice of endowment plans available in the market, deciding on an appropriate policy for yourself relies upon on numerous things, including individual needs, income, risk tolerance and so forth. In case you are thinking of investing a large amount in an endowment plan, don’t forget to evaluate the rates in advance. By checking the premium of numerous endowment plans, you may be able to select the proper plan for you.

Moreover, you ought to check the employment statistics as well. Most endowment plans provide lower returns compared to ULIPs, but they are safer from a long-term perspective. As returns play an important role in choosing the saving alternatives, you also need to take into consideration the bonus amount offered by the plan.

A few other things that a person should check include customer service, claim settlement ratio, and the track record of the company.


If you want to avail most of the benefits of an endowment plan, then you must select the most appropriate plan for yourself.

(By Naval Goel, CEO & Founder,

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