Are you one of those people who do not want to take a lot of risk with your money? Are you the kind who will trade guaranteed returns for higher ones? Are you a keen believer in safeguarding your money to fulfil your future goals like children’s education, marriage etc. If you’ve answered yes to all the questions above, then an endowment plan will be the best bet for you.
What are endowment plans?
Endowment plans are those offered by life insurance companies that give you guaranteed tax-free returns on maturity. For instance, if you annually invest Rs.30000/- in a 10-year policy for a 5 year paying term in Edelweiss Tokio Life Wealth Builder, you get a tax-free maturity benefit of Rs.2,16,720/- with a death benefit of Rs.3 lakhs.*
Suitability of endowment plans
Endowment plans are suitable for investors who have very specific goals and clear plans to meet them in mind. For instance, let us assume that your kid is in the 3rd or 4th grade today. You are aware that 10 years later, you’d be needing a lumpsum amount for his higher education. This amount is something that you cannot leave to chance or to market factors considering the inevitability of the expense. Hence, you’d want to invest it into an instrument that would give you guaranteed returns. Thus you can plan the exact sum that you require and calculate the amount that you need to invest from today to arrive at that sum.
You also get a life cover
Apart from a fixed sum at maturity, any time before maturity, if the policyholder meets with an untimely demise, the nominee would get the full Sum Assured. All these proceeds are tax-free and also, the amount that you invest today in an endowment plan, will earn you a rebate in income tax under section 80C. For instance, if you make an annual premium payment of Rs.15000/- the same would be deducted from your income while calculating the taxable income.
Calculate your needs and then fulfil of your future goals by a savings plan.