Life insurance comes in various forms and the endowment life insurance plans are very popular in India. These are also known as savings plans as they help you to save money while you keep your life insured. Endowment insurance keeps a part of the premium you pay safely locked in a life fund for your family to use if you die within the policy period. The other part of the premium is invested in safe methods and earns interest. You get the interest, along with the invested money, at the end of the policy period if you outlive it. Hence, endowment insurance works very well to manage your financial portfolio as you can combine insurance and investment under a single overhead. Read on to know why you should buy a savings plan:
- Life insurance
As mentioned above, an endowment plan is a life insurance plan, so it works very well to cover your life. You can get comprehensive coverage with endowment insurance. You can choose the coverage amount and the coverage tenure, based on your requirements. If you have a large family with small kids, you will need a longer duration and a higher sum assured. If, however, it is just you and your spouse, a smaller coverage amount may suffice. Make a list of your needs and preferences and get coverage accordingly. You also need to keep your budget in mind, as it is important to choose a plan with an affordable premium that will make it easier for you to manage your life insurance policy.
- Savings option
One of the most interesting and beneficial features of endowment insurance is that it helps you to save money. This is a very safe way to invest, as the risk is very low. You earn regular interest on your investments and you get the option of receiving the interest amount regularly or having them added to your corpus. You can use a compound interest calculator to know how much you can earn from your investment. Thus, you can save a lot of money and build up a corpus to meet the financial goals of the future.
- Tax benefits
All life insurance plans in India allow you to save tax. The premium you pay towards life insurance is tax-exempt under Section 80C of the Indian Income Tax Act. You can save a maximum amount of INR 1.5 lakhs a year when you pay your life insurance premium. This is an excellent and reliable way to save tax and another good reason why you should buy an endowment plan.
- Customisable
You can customise your endowment insurance plan with the help of riders. There are some common riders such as the accidental death benefit rider and the critical illness benefit rider that can help you make the plan very suitable for you. However, you must remember that every rider you add pushes up the cost of the policy, so only choose the ones that are of best use to you.
- Very flexible
You can see a lot of flexibility in a savings plan. You can pay the premium at flexible times. You can pay it yearly. Semi-yearly or quarterly. You can also opt for various types of payouts. If you wish to get a regular income, you can opt for that and the interest earned will be paid to you at regular intervals. Alternatively, you can opt for a lump sum payout and receive the entire maturity benefit amount at the end of the policy period. Hence, you can make the plan work for you as per your needs and get the best value out of it.
To wrap it up
Endowment life insurance, also known as savings plans, is one of the most convenient forms of life insurance. Many Indians, from various walks of life, choose to invest in endowment plans as they offer the dual benefits of insurance and investment, and that too at low risk. If you are looking for an ideal life insurance coverage where you can keep your life covered, create a corpus for the future and also save tax, opting for a savings plan may be a great idea. Make a list of your requirements, draw up a budget and then look for the best endowment savings plan to secure your future.
