Endowment Plan

Endowment Policy: An Overview

Money can not buy happiness, but it can guarantee financial protection against any uncertain event. Numerous life insurance policies are available in the market to safeguard the policyholder's life and guarantee their family a financially protected future in their absence. Besides life protection, savings are important to achieve long-term life goals. Your hefty saving can be utilized in retirement planning, funding your child’s education, backing your business idea, buying a dream house, and so on (totally depends upon your priorities).

In today’s scenario of “Buy One, Get One” offers, people look for dual benefits in a single plan, and that’s where an Endowment Policy joins you in your financial planning. The best part is that you can enjoy a life risk cover by investing your money in future saving funds. This article will discuss every detail related to Endowment Plan that will guide you as a first-time endowment life insurance policy buyer and help you make an informed decision. Keep reading!

What is Endowment Plan?

An endowment plan is a unique life insurance policy that assures a guaranteed life cover against the policyholder's death and also serves as an investment tool. Endowment plans help the policyholder invest over a period that is returned as a maturity benefit after the end of the policy period. If in case the policyholder dies during the policy period, an endowment plan provides risk cover that the nominees receive the death benefit. With these attractive features, an endowment policy becomes the best option to safeguard an individual for short-term and long-term life goals.

Who Should Buy An Endowment Policy?

Buying an endowment policy never leaves you wondering about your financial security and creates a financial cushion to lead a protected life for you and your family. If you have duly paid all the premiums, the endowment plans provide you with the guaranteed maturity or death benefit without any risk. You must be wondering: “Who is suitable to buy an endowment plan?” then here you get your answer.

Endowment plans are suitable for those with regular earnings and will need lump sum amounts in the coming future for long-term goals.
An individual who wants to secure one's family for any financial eventualities.
Young professionals who want to build a disciplined route of savings and secure their financial future.
Small and medium-level business persons, lawyers, teachers, and doctors to accomplish their long-term financial goals.
An endowment plan serves low to moderate risk for individuals who don’t deny the risk probabilities and settle their expenses even within lower returns.
A perfect option for an individual looking for life cover and investment options in one plan.

When Should You Buy An Endowment Plan?

An endowment plan guarantees to provide pre-definite financial security to the family in case of the uncertain death of the policyholder. Also, an endowment policy helps you save your fund in a disciplined manner over a pre-determined period that is provided back if the policyholder outlives the policy period.

There are different benefits endowment policies provide to the policyholder of any age, but an early purchase always comes with added perks. Anyone above the age of 18 and with a good source of income is eligible to buy an endowment plan and achieve a risk-free financial corpus. Yet, the right time to invest in an endowment policy is in your late 20s or early 30s. At an early age, you have fewer responsibilities than when you are in your 30s or 40s. This can assist you in building a corpus for your future responsibilities. Hence, invest in an endowment plan as early as possible to get guaranteed life insurance cover at a prime cost.

Types of Endowment Plans

Endowment plans are considered the best assets to manage your finances and provide life security. Hence, you need to clearly understand the types of the various endowment plans before making a purchase decision.

Here’s a short overview of the types of endowment policies that will help you make a buying decision per your financial requirements.

Unit Linked Endowment Policy

This kind of endowment plan is a fixed termed saving plan where the premium paid is divided into two parts to provide you with the investment option and the benefit of life coverage. The policyholder can choose to invest in various funds per their risk appetite. The return on these funds totally depends upon the performance of the funds. This plan is suitable for individuals who have a high-risk appetite and want to earn high investment returns.

Non-Participating Endowment Policy

The non-participating endowment plans do not offer any benefits or bonuses for the premiums paid as they do not participate in the profits of the life insurance company. A sum assured is paid to the policyholder along with interest on maturity or in the uncertain death of the policyholder within the policy term.

Guaranteed Endowment Policy

The endowment insurance plan guarantees to pay the sum of the money to the policyholder or the beneficiaries in case of uncertain death within the policy period. The bonuses under the plan are not guaranteed.

Low-Cost Endowment Policy

This type of endowment plan is designed to allow the policyholder to accumulate funds for the future and helps them pay loans, mortgages, and other obligations. In case of the uncertain demise of the policyholder, the sum assured is provided to the beneficiary or the nominee.

Full/With Profit Endowment Policy

This kind of endowment plan provides bonuses or interest on the premium the policyholder pays. The policyholder receives the sum assured as determined at the time of the policy inception with the declared bonus and final payout. Hence the final payout is comparatively higher.

Eligibility Criteria to Buy Endowment Plan

To invest in an endowment plan, there are some essential eligibility criteria and restrictions that an individual needs to meet. One can use the benefits of the plan to fund the education of their child, plan their retirement, create wealth, or fulfil other liabilities.

Minimum Age

0 Days and for some 18 years
Maximum Age

60 years
Maturity Age

18 years
Maximum Sum Assured

10 times of annual premium paid
Policy Tenure

5-20 years
Premium Payment Frequency

Regular/ One-Time/ Limited
Premium Payment Options

Yearly/ Half-yearly/ Monthly/ One-time
Riders

Accidental Death/ Critical Illness/ Hospital Cash/ Waiver of Premium/ Terminal or Permanent Disability

Why Should You Buy Endowment Plan?

Endowment plans are systematic ways to accrue a financial corpus in a disciplined manner. When an endowment insurance plan matures, the policyholder has a pool of savings they can choose to re-invest or enjoy to fund milestones of their lives. Here are the major highlights of why you should prefer investing in an endowment policy.

An additional advantage of risk cover for family and dependents.
Risk-free investment with comparatively lesser return.
Dual tax benefits on the premium paid and the benefits received.
Life cover at any unforeseen event in life.
Maturity amount with additional bonuses and benefits (as applicable).
A loan facility is available under an endowment plan to fulfil liquidity needs.

Companies Offering Endowment Plans in India

Currently, 23 life insurance companies in India offer different insurance plans in multiple categories. We have provided the list of all life insurance companies in India with their claim settlement and solvency ratio to help you make an informed decision and buy an endowment policy.

Life Insurance Company	Claim Settlement Ratio	Solvency Ratio
Life Insurance Corporation of India	98.74	1.79
HDFC Life Insurance Co. Ltd.	98.66	1.89
Max Life Insurance Co. Ltd (2023-24)	99.65	1.72
ICICI Prudential Life Insurance Co. Ltd.	97.82	2
Kotak Mahindra Life Insurance Co. Ltd.	98.82	2.64
Aditya Birla SunLife Insurance Co. Ltd.	98.07	1.88
TATA AIA Life Insurance Co. Ltd	98.53	1.89
SBI Life Insurance Co. Ltd.	97.05	2.10
Bajaj Allianz Life Insurance Co. Ltd.	99.02	6.14
PNB MetLife India Insurance Co. Ltd.	97.33	1.87
Reliance Nippon Life Insurance Company Ltd.	98.67	2.33
Aviva Life Insurance Company India Ltd.	98.39	2.14
Sahara India Life Insurance Co. Ltd.	97.08	8.77
Shriram Life Insurance Co. Ltd.	82.39	2.15
Bharti AXA Life Insurance Company Ltd.	99.09	1.72
Future Generali India Life Insurance Company Ltd.	96.15	1.67
Ageas Federal Life Insurance Company Ltd.	97.03	3.09
Canara HSBC Life Insurance Co. Ltd.	98.44	2.79
Bandhan Life Insurance Company Ltd.	99.03	2.97
Pramerica Life Insurance Co. Ltd.	98.30	3.99
Star Union Dai-Ichi Life Insurance Co. Ltd.	97.42	1.93
IndiaFirst Life Insurance Company Ltd.	96.92	1.65
Edelweiss Tokio Life Insurance Company Ltd.	98.09	1.97

Life cover up to policy term
Surrender value
Participation in Profits
Avail of Loans

Eligibility Criteria

Entry Age: 8 - 55 years
Maturity Age: 75 years
Sum Assured: Rs. 1 Lakh - No limit

How Does An Endowment Plan Work?

After comparing the available endowment plans, select one that fits your requirements and preferences. You can decide on the sum assured, affordable premium payouts, and frequency modes. If you duly pay all the premiums, an endowment policy guarantees to pay the death benefit and maturity benefit in the following way

If you die within the policy term
In this case, the family/beneficiaries of the policy receive the sum assured as the death benefit along with guaranteed yearly additions or any other bonuses as applicable. The family can use that to support their financial liabilities.
If you survive the policy term
In such cases, the policyholder receives a guaranteed sum assured as the maturity benefit at the end of the policy term, along with guaranteed yearly additions and loyalty additions. That can be used for retirement planning, children’s education, or other financial obligations.
If you surrender the policy before the maturity date
In this case, the policyholder receives a definite percentage of the premium paid towards the policy as a surrender value.

Features of Endowment Policy

The following features of endowment insurance make it a worthwhile investment.

Life Risk Cover

The policyholder can decide on the sum they wish to receive to strengthen their finances. Your family receives this sum assured if you pass away during the policy term. By selecting eligible riders under an endowment policy, you can enhance the risk cover.
Higher Returns

An endowment policy offers higher returns than pure life plans, i.e., term insurance plans which ensure that your family remains financially protected in case of any unforeseen event.
Flexible-Premium Payment

An endowment plan provides the extended flexibility to choose the premium paying modes. You can pay the premiums yearly, half-yearly, monthly, or in a one-time payment. Also, you can decide the premium payment period to pay the premiums up to a certain time and enjoy the benefits.
Buy Riders

The policyholders can enhance the cover by adding one or multiple riders available such as critical illness, total disability, accidental death, and premium waiver. These riders are available by paying an extra premium amount.
Suitable for High and Low-Risk Appetite

The endowment policies are considered the best investment options compared to ULIPs, and other investment options. Since the amount invested is not directly invested in the market, there’s no risk or the least risk involved. Also, there are different endowment plans available for individuals with high-risk appetites.
Bonuses

Additional bonuses are available under the endowment plans that directly increase the death or maturity benefit you or your family receives. An endowment policy offers benefits in the form of guaranteed annual additions, reversionary bonuses, and terminal bonuses (if any).

Benefits of Investing in an Endowment Plan

Besides providing financial security to attain your goals, the endowment policy protects your loved ones during crucial times. The benefits offered by an endowment policy are

Endowment Life Insurance Plan Premium Calculator

An endowment insurance plan calculator is designed to calculate the estimated premium amount you must pay to claim the assured sum. With an endowment plan premium calculator, you can quickly compare the premium amounts at a time and help make an affordable and advantageous decision. You can easily find the endowment policy calculator online on the official website of the life insurers, along with the plan details. Some of the significant benefits of using an endowment plan calculator are

Better decision making
Customize plan easily
Time-saving process
24X7 availability
Avail of discounts
Free to use

Factors Affecting Endowment Plan Premium

A wide range of factors affects the endowment plan premium cost that a policy buyer needs to take care of while purchasing an endowment policy. Let's discuss them in detail

Age

The endowment plan premium cost is lower than for older individuals. The reason is that older bodies are a good host to diseases and ailments, so they have higher chances of filing a claim.

Sum Assured

If the sum assured of an endowment policy is high, then the premium amount will be higher too.

Gender

It is scientifically proven that, on average, women have 5 years longer life span than men. Hence they need to pay a lower premium amount.

Smoking Habits

A person with no smoking habit has a longer and healthier life. Hence smokers or tobacco users must pay higher premiums under an endowment plan.

Family History

If your family medical history is influenced by a disease, like cancer, or any other life-threatening disorder, your premium cost will rise.

Policy Duration

If the endowment policy is for a longer period, then it has to cover the risk at a critical age, and hence the premium cost would be higher.

Premium Payment Options for Endowment Policies

The endowment policy allows the policyholder to pay the premiums in multiple ways for suitability and ease. You can select any one of the endowment plan premium paying options from the below-mentioned

How to Calculate Endowment Plan Premium

Before purchasing an endowment plan, it is important to understand the premium amount, maturity value, surrender value, loan, expected bonuses, and other benefits. You can get all the details using the endowment plan premium calculator available on the life insurer's website by providing some essential details like your age, contact information, medical history, etc. The calculator will calculate the premium amount you must pay under the endowment policy. Follow these simple steps to calculate the premium amount with us.

Visit the official website of “RenewBuy”.
Click on the “Life Insurance” tab available on the header menu.
Click on the “Inquire Now” option.
Enter the required information, such as full name, gender, mobile number, email ID, occupation, and annual income.
Click on the “View Quotes” option.
The next tab will show the estimated premium cost with suitable endowment insurance plans.

Are Endowment Life Insurance Policies for You?

An endowment policy is the best investment tool for those with a regular income source. It offers life coverage for a certain period as well as ensures that you get a specific amount with guaranteed benefits after surviving the policy term. Hence, if you need a lump sum amount to achieve some long-term goals in life with a low-risk appetite, consider investing in an endowment policy.

It is a matter of debate on the returns on investment that an endowment plan offers, as these are comparatively low. But experts suggest investing in endowment policies to yield added benefits.

The following important points you need to consider while making a final purchase decision for an endowment plan

Plan Early

Starting early can multiply the benefits under endowment policies as the policyholder gets a longer investment horizon that can reap higher returns and build a vast financial corpus. This allows the investor to involve in a disciplined saving pattern and ensures better returns to build a hefty corpus.

Assess Your Financial Goals

When investing in an endowment life insurance plan, you must evaluate your financial requirements first. Since the sum works as an asset for your family in your absence, it is advised to calculate all the financial occupancies, dependencies, lifestyle, etc. Then decide on a suitable coverage amount to help your family stay financially independent even in your absence.

Compare Policies

Compare different endowment plans offered by various life insurance companies in the insurance market, including the premium paying terms, policy terms, and payout options. Select the endowment insurance policy with the best combination of hefty coverage and good returns.

Know Your Risk Appetite

Different types of endowment plans are available that offer the benefits associated with the risk appetite of the policyholder. If the policyholder has a high-risk appetite, then a Unit-linked endowment plan is suggested to invest in.

Premium Amount

Once you decide on the risk cover or sum assured, premium cost and duration are what you need to consider. Since an endowment plan is taken for long-term investments, you will have to pay the premiums for the long term. Select an affordable premium amount, and you can pay without a skip.

Premium Payment Flexibility

Different endowment plans offer flexible options in opting for the premium paying term and premium payment mode to avail the policyholder of enhanced benefits. For a salaried individual, the monthly premium payment option is available, and a person with inconsistent income opts for one time or limited premium payment option.

Rider Options

Rider options are available to enhance the base policy coverage by paying an extra premium amount except for the base premium. Different life insurers offer rider options such as double endowment, education endowment, marriage endowment, etc. Also, you can buy critical illness rider, accidental death benefit rider, and many other options.

Claim Settlement Ratio and Process

The claim settlement ratio of a company is a vital factor in judging the viability and trust of the insurance company. It reflects how competently a life insurer settles the claims.

Bonuses

An endowment policy provides bonuses to the policyholder based on the performance of the company. Since the life insurance company uses a part of the premium to make investments, profits are distributed to the policyholder at the end of each year.

Riders Available Under Endowment Plan

To enhance the in-built features and the base cover under an endowment plan, the life insurance companies offer an option to add riders. The common riders offered by an endowment policy are listed as

Accidental Death Rider

If the policyholder opts for this rider, then in case of accidental death within the policy term, an Accidental Death Benefit Sum Assured will be provided to the beneficiaries along with the death benefit.

Critical Illness Cover

If the policyholder selects the rider, then a lump sum amount is paid to the assured on the first diagnosis of the critical illness covered under the rider.

Disability Rider

In case of a permanent or terminal disability, this rider provides financial backup to the policyholder.

Hospital Cash Benefit Rider

If the policyholder opts for this rider, then a daily allowance and post-treatment benefits are provided.

Waiver of Premium Rider

In case of any uncertain event with the policyholder that causes death or permanent disability, then the subsequent premiums of the endowment plan will be waived.

Exclusions Under Endowment Plan

With the benefits and the features, the endowment policy comes with certain exclusions, under which the life insurance company is not obligated to pay any benefits to the policyholder or the beneficiaries. These exclusions are

Suicidal death
Attempt of self-injury
Involved in illegal activities
Being a part of riots or similar offences
Under the influence of alcohol or substances

Why Should You Buy Endowment Plans Online?

No wonder digitalization has enhanced the ease in every field, and the insurance sector has not remained untouched. All the life insurance companies have enabled policy buyers to purchase endowment insurance plans online and offline. The following benefits are available if you choose to purchase an endowment policy online.

Easy Comparison: It becomes easy to compare the endowment plans from different life insurers when all the plans and their benefits are visible online.
Reliability: Online mode has increased the reliability and transparency between the customers and the life insurers as you can go through the policy terms and conditions, advantages, etc. You can also check the customer reviews to make an informed decision.
Premium Payment Option: Various payment options are available to secure premium payments at the policyholder's convenience.
Customization: Online purchase has made it easy to customize your plans as per your requirements. You can set your premium amount per your financial convenience and enhance the coverage with the riders.
24X7 Assistance: Policyholders can instantly reach out to experts for any arising issue or to ease the claim process without leaving their homes.

Buying Process of Endowment Policy

Once you decide to buy an endowment plan, you can buy the plan by visiting the official website of the concerned life insurers and from RenewBuy. Follow the given steps to buy an endowment plan online.

Buy From the Official Websites of Insurance Companies

Visit the official website of the Life Insurer and click on the “Endowment Tab”.
Select the desired plan.
Fill in all the required information.
Click on “Buy Now” button.
Make payment using your preferred payment method.
Once the payment is confirmed, the policy documents will be shared on your registered email.

Buy From RenewBuy

Let’s look into the simple process of buying endowment insurance from RenewBuy.
Visit our website and click on the “Endowment Insurance” tab from the header menu.
Then, click on the “Inquire Now” button.
Enter the required information.
Compare and pick the best premium plans from the list provided.
Once the payment is made, you will get your policy documents on your registered email ID.

To make the life insurance buying process more convenient, connect with one of our RenewBuy Partners to buy the best-suited endowment life insurance plan per your needs.

Why Purchase Endowment Plan from RenewBuy

RenewBuy helps reduce the hassle of studying different life insurers and their endowment products all on your own. Our experts pick the best one from many life insurers that perfectly complement your insurance needs and help you buy an endowment insurance policy in minutes. The key reasons why you can prefer to purchase endowment plans from RenewBuy

IRDA certified
Expert connect
Get instant quotes
Get insured by leading insurers
Discounted Premiums
Compare Various Term Plans in Just a few Clicks
Simple & Easy Buying Process
24x7 Claim Assistance

Documents Required to Buy Endowment Plan

To purchase an endowment policy, you need to complete the documentation process by submitting some essential documents. The following documents are required.

Duly filled application form,
ID proof (Aadhaar Card, Pan Card, Voter ID, etc.),
Address Proof (Electricity bill, Passport, Ration card, etc.),
Passport size photos,
Salary slips and a filled proposal form along with medical records.

Claim Process of Endowment Plans

If you outlive the maturity period, you are eligible to claim for the maturity benefits, or in case of your uncertain demise, the beneficiaries must inform the insurance company of the loss and begin the claim process of the endowment policy. You can follow the below-mentioned process.

Inform the concerned insurance company
Fill out the claim form with the signature of the nominee/ legal heir
Submit the required documents
The insurance company verifies the documents
On successful verification, the claim is approved (15 to 30 days required; may differ from insurer to insurer)
The amount is transferred to the provided bank account of the beneficiary.

Document Required for the Claim Process

The following documents are required for a successful claim under an endowment insurance plan.

In case of Maturity

Original policy document
Claim form
Discharge voucher
Other required documents

In case of Natural Death

Original Policy Document
Claim Form
Death certificate
Application from claimant
Other required documents
Hospital discharge summary (in case of death due to illness)
Medical report (in case of death due to illness)

In case of Accidental Death

Post morterm report
FIR report
Death certificate
Original policy document
Claim form
Certificate of medical attendance
Loss statement/ death proof provided by the attended doctor
Other required documents

Final Words

An endowment policy is a great way to develop a sense of saving as well as secure your life against uncertainties. The prevalent benefits and the features mentioned above justify why it is important to invest in an endowment plan. You can easily set your financial goals, pick one suitable endowment plan, and take an accountable step to secure your life, including your family financially.

Made your decision? Why not make the process easier by connecting with RenewBuy Partners.