Things You Should Know Before Buying an Endowment Plan

They say, “Rome wasn’t built in a day” and this very well applies to your savings. You cannot accumulate savings for your future needs unless you plan and save regularly to build a corpus. A proper guaranteed income plan that benefits you even in uncertain market conditions could pave the way for your financial freedom.

Endowment policies serve as an excellent investment that safeguards you with Life insurance and guaranteed income; they serve the purpose of wealth creation by ensuring income and further protecting your family against any contingencies.

Given the importance of these savings plans and the fact that there are a plethora of options available in the market, you must know what to look for while buying endowment plans.

The following could be used as a checklist before you buy an endowment plan.

  1. Stability and reputation of the company: Remember that you will invest a good part of your life’s savings in these plans, and hence you need to choose a financially stable company with a good reputation in terms of its policies. You cannot compromise at any stage of selecting a reliable company that you would need to trust with your life’s savings.
  2. Claim settlement ratio and customer service: The claim settlement ratio gives a clear picture of the number of claims settled against the number of claims raised. The higher the claim settlement ratio, the higher is the reliability of the policy provider. You can also check the company’s customer service experience to understand if they offer quality service to ease your future needs.
  3. Premium rates and their payment flexibility: If you are taking high premium plans, always check the premiums of different policies as they vary between plans and provider companies. Choose the plan that gives you the best return when compared to the premium paid.

The flexibility of premium payment is also an important aspect to look at when you take an endowment policy – many policy providers give the option of paying premium monthly, biannually, annually, or a one-time lump sum. You can choose the policy that offers you a suitable premium paying frequency at your convenience. For instance, Tata AIA premium pay is available online along with flexible premium payment options as per your needs.

  1. Enhanced coverage benefits: Apart from life insurance cover, endowment plans offer enhanced protection options where one can choose to add additional riders like critical illness, disability, death rider, etc. Make it a point to select those plans that give you rider benefits for broader and comprehensive coverage. These additional riders provide enhanced security to your family in the event of any mishaps.
  2. Track record for higher returns and bonus: In the end, everything boils down to getting good returns on your invested money; hence always check the bonus history and the returns track record of the policy provider before you choose the endowment life insurance plan. Ensure that you select the plan that gives you desired returns to meet your short-term and long-term financial goals.

When to take an endowment plan?

Starting early in your career helps build a significant corpus that could guarantee secured financials. There’s never an ideal age to take an endowment plan because it varies from person to person. You should choose the plan according to your current income, future requirements, lifestyle, and retirement-seeking age. And if you are someone who does not have the habit of saving money religiously, these plans will prove the most effective for situations like a child’s higher education, marriage, buying a house, etc.

How to get an endowment plan?

You can use the checklist mentioned above to conclude the features that suit your requirements the most. While choosing the plan, make it a point that the policy term and the pay-out term of benefits match with your financial planning.

Once you choose the policy provider that is offering the features that you desire, you can approach the insurance provider directly at their dedicated branches to buy the policy. Alternatively, you can also purchase these plans online at ease, but make sure that you select the suitable options and input correct information while filling up the form.

Always double-check the policy features and the benefits it offers before finalizing and paying the premium.

To sum up:

Endowment plans act as assured income plans to secure you in 3 different ways – protecting with a sum assured, guaranteed income for wealth creation, lump-sum payment at the end of the policy tenure that could act as a corpus for retirement, and personal needs.

Hence always check the suitability of the plans to your financial goals and needs before taking them.