3. Introduction
An Endowment policy is a life insurance to pay
back a lump sum amount after a specified term
(on its 'maturity') or on death of the policy
holder.
It provides a living benefit to the
policyholder as periodic pay-outs along with
insurance coverage.
4. Endowment Policy
Endowment policy is a type of life insurance
coverage in which, the insurer offers payment of
sum assured to the policy holder or to his nominee
or assignee or legal heirs either at the end of the
specified period or on death of the assured before
the specified period.
5. Types of Endowment policy
1. Pure endowment policy
2. Ordinary endowment policy
3. Joint life endowment policy
4. Double endowment policy
5. Fixed term endowment policy
6. Educational annuity plan
7. Money back policy
8. Marriage endowment policy
6. 1. Pure Endowment policy
In this policy the assured or his nominee gets
only a specified sum of money on his death or on the
maturity whichever is earlier.
2. Ordinary Endowment policy
This policy represents Life insurance in true
sense, but it is taken for a specified term of years. The sum
assured is payable either on death or on its maturity. It is a
combination of term and pure endowment.
3. Joint life Endowment policy
This policy covers more than one life under a
single policy. The sum assured is payable on the expiry of
the term or on the death on one of the assured during the
endowment period.
7. 4. Double Endowment policy
Under this policy, if the assured dies during
the endowment period, basic sum assured is payable and
if he survives the period double the sum assured is paid
5. Fixed term endowment policy
In this policy sum assured is payable only at
the end of stipulated period, the premium ceases if the
death of policy holder occurs. Then policy becomes fully
paid.
6. Educational annuity plan
In this policy the assured amount is not paid
in lump sum but is payable in equal instalments for 5
years.
8. 7. Money back policy
This policy is suitable for those who feel the
need for lump sum benefits at periodical intervals. At the
event of death within the period the full sum assured is
payable without any deduction.
8. Marriage Endowment policy
This provides funds for the marriage of the
children. Premium is paid till death or for an agreed period.
If the child dies during the tenure the assured is an option
to substitute the name of another child as beneficiary
9. Merits And Demerits
1. Has dual benefit of investment and insurance.
2. Long term investment and receives a lump sum amount at
the end.
3. Suitable if you require a lesser amount of sum assured.
1. The premium is relatively higher than a term plan.
2. The surrender value is lower than the premium paid.
3. If you wish to surrender this policy within first 3
years, you will not receive any surrender value.
Demerits
Merits
10. Conclusion
Endowment policy is insurance policy where an assured sum
is payable on the event of death of the policy holder on the
expiry of the policy.
An Endowment Plan allows you to save
regularly, invest systematically, receive lump sum maturity
amount and a periodic pay-out, all this while enjoying a life
cover.