A famous man once said, “Save money, and money will save you.”
Regularly setting aside a part of your income will give you the financial freedom to fulfil your life’s aspirations. And savings plans enable you to save money systematically, creating wealth over time. An endowment plan is one such savings tool. With an endowment plan, you get the best of both worlds – the opportunity to save & grow your money and financially secure your family’s future with a life cover1.
Are you unsure about investing in endowment plans? Here’s an overview of its benefits and features to help you make an informed decision.
Features of Endowment Plans
Life cover 1:
Endowment plans pay an amount known as Death Benefit to the nominee in case of an unfortunate demise of the life assured.
The unique feature of endowment plans is that they provide benefits upon maturity. On completion of the tenure of the policy, the policyholder receives a maturity benefit.
Usually, the premium payment frequency can be selected as per comfort. The policyholder can opt for a monthly, half-yearly, or annual premium payment mode. The entire amount can be paid all at once as well.
Did you know that you can claim deductions# from your taxable income for your endowment plan premiums? Under Section 80C of the Income Tax Act, 1961, you can claim deductions up to ₹ 1.5 lakh for premiums paid in a financial year.
Who Should Buy an Endowment Plan?
Endowment Plans can help build an adequate corpus through disciplined savings. Thus, these can help you meet your long-term financial goals. You may plan on buying real estate, save for your child’s education or for your retirement, endowment plans can help you fulfil all such objectives.
Moreover, if you have financial dependents, losing the support of your income can cause financial distress for them. The life cover1 provided by endowment plans secures your family against such unfortunate events.
Hence, an endowment plan is for anyone who is looking to develop a smart saving habit along with financial security.
Why Should You Buy an Endowment Plan?
An endowment plan offers triple benefits:
- Safeguards your loved ones against economic hardships in case of an unfortunate event
- Helps create a corpus for your life goals through regular savings
- Tax# benefits may be available as per prevailing tax laws
Hence, an endowment plan is a smart savings option. You must surely consider including it in your financial portfolio.
The Right Circumstances for Buying an Endowment Plan
Are you looking for goal-based savings? And want to ensure financial security for your family too? Then you should invest in endowment plans as early as possible. As soon as you have a steady flow of income to be able to pay the premium, you can buy an endowment plan.
Buying early gives you a long time to stay invested and helps build a larger corpus.
An endowment plan proves to be a smart buy to achieve your financial targets. It helps create a corpus for any hefty expense that might arise in the future. Moreover, it provides financial security for your family against life’s uncertainties.
Let us take an example: Mira always wanted to purchase her own house. She decided to start saving money in a new-age endowment plan like ICICI Pru Guaranteed Income For Tomorrow as soon as she started earning. The benefits under this plan are guaranteed2 at inception. She wanted to purchase the house on her 35th birthday. The plan offers life cover1 with an option to receive the guaranteed2 benefits at the end of the tenure of the policy in the form of a lump sum or as income over multiple years. Mira chose to receive the money in a lump sum. The Guaranteed2 returns provided by the plan can help Mira to purchase her own house.
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# Tax benefits: Tax benefits under the policy will be as per the prevailing Income Tax laws. We recommend that you seek professional advice for applicability of tax benefit on premiums paid and benefits received. Goods & Services Tax and Cess (if any) will be charged extra as per prevailing rates. The tax laws are subject to amendments from time to time.
1 Life cover is the benefit payable on death of the life assured during the policy term
2 Guaranteed benefits are payable subject to all due premiums being paid and the policy being in force on the date of maturity.
ICICI Pru Guaranteed Income For Tomorrow UIN 105N182V07