Raj was a young IT professional who earned a fairly decent amount of monthly income. Everything would go smoothly in his life till the second week of the month. Post the second weekend of every weekend, Raj’s bank account would reflect almost negligible savings.
Do you share a similar experience like Raj?
Where you heading to the second week of the month and you are left with no savings for the month?
If that’s the case with you as well then a savings plan can actually come to your rescue!
Whether you are young, you tend to splurge too much and save nothing. You love to buy new clothes, gadgets, accessories and so on. In short, you hardly have any count of your spends! However, there are so many means to save your hard-earned money. One of the best options available is an ‘endowment plan’.
It benefits you in a dual way by getting a life cover and saving at the same time.
Let’s look at what is an endowment policy?
An endowment policy is a life insurance contract designed to pay a lump sum after a specific term on its ‘maturity’ or on an unfortunate demise of the policyholder. In literal terms, an endowment policy will serve as both saving and protection. Such policies will provide maturity and death benefit both. The maturity benefit is payable if the policyholder survives until the end of the policy term and pays the entire premium.
Who should buy an Endowment policy?
- It’s a fantastic saving option for people who have a regular flow of income such as a salaried person, professionals, and businessmen, etc.
- It’s also wise for people who are not great at saving and spend extravagantly.
- People with zero risk-appetite should opt for such plans where the returns are guaranteed.
What should you consider before buying an endowment plan?
1) Characteristics of an endowment plan
An endowment plan provides life cover along with a benefit to earn guaranteed returns from your hard earned money.
In case of any mishappening, it provides the entire sum assured to the nominee of the policyholder.
2) Conditions for purchasing an endowment plan
Risk-free assured investments are the need for the hour. Therefore these plans should be bought to cover the following areas:
- Financial protection for the family
- To achieve one’s financial goals
- To save for future investments over a long period
3) The purpose to purchase an endowment plan
- A disciplined way to start saving your hard earned money
- Would be of a considerable help in case of death of the breadwinner of the family
- Endowment plans are more beneficial as you tend to get a life cover as well as an opportunity to build a secured future.
- Zero risks involved
- One of the biggest benefits one can come across post buying an endowment policy is that it provides tax exemption under Section 80C and 10 (10D) of the Income Tax Act.
Buying an endowment plan will put your worries at ease. It will not only save your hard earned money but also make you a disciplined saver providing sure shot returns with loyalty additions.