An endowment policy is appropriate for those people who spend a lot of money and like to buy things, often expensive ones, impulsively. If you fall under this category of a chronic spender, you might find it pretty hard to save money for the future. So, in such scenarios, you should invest in an endowment policy. It will provide you with a systematic path to save funds for long-term needs.
This plan is usually beneficial for people with a regular income and can invest a significant sum after a specific period. To help you understand better, let us first discuss an endowment policy briefly. Then, we will move towards when you should buy one. Let us move forward without any delay.
What Is An Endowment Policy?
It is a type of life insurance policy. This endowment policy, along with covering the insured’s life, also helps them to save a significant amount over a certain period of time to receive a substantial amount when the policy matures if they survive the plan term. The amount that one receives after the system’s maturity can be utilized for various necessities such as securing post-retirement life, education and marriage of their children, and many more long-term needs. These policies can be mainly categorized into two types:
- With Profit
- Without Profit
An endowment policy ensures that the assured amount will be paid to the beneficiaries if the insured does not live to complete the policy term. The sum will be delivered to the policyholder if he/she survives through it. Therefore, any life insurance plan with a saving element and a lump sum benefit at policy maturity is an endowment policy.
When Should You Buy An Endowment Policy?
A person should always have a risk-free investment option to save money and secure the future. So, you should purchase an endowment policy for the financial security of your loved ones, to save money for long-term goals, such as children’s education and marriage, buying a house, etc., and also to build a corpus for future needs and requirements, such as a retirement fund.
It would be best if you bought a regular premium plan when you have a steady income, and you are confident of your ability of periodic payments of the premiums. It is noteworthy that the policy period’s length influences the overall benefits because the longer the period, the better the returns. However, if your income is irregular, you should go for single play or flexible payment plans. In other words, endowment plans yield preferable results when the policy is long-term and savings are done regularly.
So, by now, you might have realized what endowment policies are and when is the right time to buy. These plans are beneficial because they imbibe the nature of saving in you and fetch you a substantial amount of money after its maturity. Investing in an endowment policy will help you save for the future and protect your partner and loved ones financially.