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If you spend unnecessarily on things now and then and struggle to build a habit of savings, an endowment savings plan is for you. Endowment plans are a type of insurance cum investment plan that helps you save regularly to achieve your long-term goals. If you haven’t found an insurance plan for yourself, here are some reasons to consider buying an endowment insurance plan:

• Endowment plans provide life insurance.
  One of the core features of endowment plans is that they provide life insurance protection. So, in the scenario of your unforeseen death, your loved ones receive a guaranteed death benefit (sum assured) to get them through the financial hardship underway in your absence. Endowment insurance aims to become the primary source of income in such times to secure your loved ones. This sum assured helps your family members take care of their daily expenses and fulfil short to long-term goals.
  
  You can also get additional security against critical illnesses or diseases of a life-threatening nature. With this added option, you either get a guaranteed sum or get the payment of premiums waived off once and forever on the diagnosis of a critical illness.
• Endowment savings plans grow your wealth.
  Endowment plans help inculcate the habit of regular savings through the payment of one-time or fixed premiums. But more than that, they help you grow your income/ earnings by giving you mid to high-level returns on your premiums invested. There are two types of endowment insurance plans – market-linked and non-linked - so the value of returns generated varies. Market-linked endowment plans give higher returns but carry the risk of loss.
  
  Non-linked endowment plans, which are more common, give medium returns but at no risk whatsoever. This risk-free nature of endowment plans makes it a very viable purchase for those averse to taking high risks while investing. You receive these returns in the form of a fixed and guaranteed monetary lump sum called a maturity benefit.
• Endowment insurance gives you additional bonuses and tax benefits.
  For staying invested for the long-term, endowment plans give you various bonuses that increase the value of your maturity benefit. These bonuses are terminal bonuses, reversionary bonuses, and loyalty additions/boosters that boost the total value you receive at the end of the endowment savings plan. In terms of tax benefits, you get tax reliefs under two provisions the Income Tax Act, 1961:
  • Under section 80C, you can claim the premiums you paid towards securing the benefits of the endowment savings plan as refunds. The total amount you can claim as a refund is up to ₹1,50,000 in a year.
  • Under section 10 (10D), the death benefit/sum assured you receive under the endowment insurance plan are exempt from tax deductions. Even the maturity benefit you receive at the end of the endowment plan is tax-free.
• Endowment insurance plans give you additional benefits.
  There are extra benefits that you receive if you get an endowment savings plan. For instance, you can take a loan against your endowment insurance plan and make partial cash withdrawals in an emergency, provided the mandatory lock-in period of 3 to 5 years, depending on the endowment plan. There is also flexibility in paying premiums one-time or in regular instalments. Moreover, if you stop paying your premiums, the endowment savings plan adjusts the total value of your sum assured/ maturity benefit to the number of premiums paid. This reduced paid-up sum assured is subject to specific conditions and on informing the insurer.

To sum it up:

Endowment plans are a must-add to your insurance and investment portfolio. As these provide the dual advantage of life insurance protection and wealth creation at no risk, they are an attractive option for those who don’t want to take on any market risks while investing. The best endowment plan is ideal for battling the hindering effects of inflation and ticking off long-term goals such as higher education, marriage, retirement, travel, and more.

Visit PNB MetLife to know more about Long Term Savings, Term Insurance & Term Plan.

Disclaimer:

The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision. Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details

PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
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