Types of Endowment Policy
In Unit-linked plans, the investment risk in the investment portfolio is borne by the policyholder
What is an endowment plan?
An endowment plan is a type of life insurance plan. It offers low-risk savings for future goals and a life cover5 to protect your loved ones in case of an unfortunate event. The guaranteed savings from an endowment plan can offer you peace of mind and protect your money from market fluctuations.
What are the different types of endowment policies?
“Never depend on single income. Make an investment to create a second source”, celebrated investor Warren Buffet said about being rich. To accumulate funds, you need to save in a disciplined manner. And endowment policies encourage regular savings, helping you to create wealth over time.
Endowment policies also offer life cover5 for a fixed period. In exchange for low-cost premiums, an endowment plan provides your family with financial coverage against the uncertainties of life. Besides, the returns can help you achieve your long-term financial goals like your dream house, your child's education, your retirement, and much more. Also, if you face a cash crunch, you can take loans against your policy.
With this plan, you can also avail deduction up to ₹ 1.5 lakhs for your premiums paid under Section 80C of the Income Tax Act, 1961. And the maturity amount is also tax-free* u/s Section 10(10D) subject to conditions mentioned therein.
Considering so many benefits, endowment policies are one of the best financial tools available to fulfill your dreams. But before you buy, you need to understand the features of different types of endowment plans and the one that best suits your needs. Here’s a brief guide.
Full Endowments
Often known as with-profit endowment plans, these guarantee you an amount, as the sum assured, at the end of the policy term. In case of an unfortunate event during this period, the insurer pays this amount to your nominee.
However, the maturity benefit you receive after the policy matures is often higher than the sum assured as the insurer provides you with additional money in the form of bonuses.
Thus, full endowments can help you earn extensive earnings over time.
Low-cost Endowment
In this plan, the premium amount is less and helps you to save for future payments, due after a certain period. The insurer guarantees the sum your nominee will receive in case of an eventuality. Yearly bonuses also increase the amount payable to you at maturity.
The primary purpose is to create a fund within a defined time-frame. You can, thus, use this type of endowment to finance loan repayments or specific life goals.
Unitised with-profit endowment plan
These schemes combine the high earning potential of ULIPs with guaranteed3 returns to keep your investments safe from market fluctuations.
The scope of profits with these plans depends on the capital market. But these plans cushion the effect of market downswings with an assured payout at maturity. Regardless of the fluctuations in the capital market, you are sure to receive this guaranteed3 payback. And in your absence, your nominee receives this amount.
Thus, you can consider this product as a safe investment option with a higher return opportunity.
3 T&Cs Apply
Non-profit endowment
This policy offers a specified lump sum amount to you on maturity or to your nominee in case of any unfortunate event, whichever occurs earlier. The payout money remains unchanged as the insurer does not offer bonuses with such plans.
Thus, these plans are ideal as safety nets for your family against any financial distress in your absence.
Participating Endowment Plan
A participating endowment plan offers life cover and provides returns. The returns include bonus amounts basis the life insurance company’s performance. This bonus amount increases the overall returns from the plan.
Non-Participating Endowment Plan
Non-participating endowment plans are opposite to participating endowment plans. They do not offer bonuses out of the company’s profits. Instead, they have a fixed maturity and death benefit that is decided at the beginning of the policy term.
Features of Endowment Plans
Life cover5
All types of endowment insurance plans offer life cover5. The life cover5 amount is paid to your loved ones in case of an unfortunate event during the policy term.
Maturity benefits
The returns provided by your life insurance plan is called a maturity amount. An endowment plan offers maturity benefits that are fixed at the time of purchasing the plan. These maturity benefits help you achieve your financial goals.
Flexibility in premium payment
Depending on the plan you choose, endowment plans offer flexible premium payment options. You can choose to pay your premiums monthly, half-yearly, annually, or all at once as per your convenience.
Flexibility in receiving payouts
Depending on the plan you choose, endowment plans allow you to receive your payouts monthly, half-yearly, yearly or as a lump sum, as per your requirements.
Low risk
All types of endowment plans offer low-risk returns. These plans are not market-linked. Hence, the returns do not vary basis market volatility.
Tax* benefits
These plans offer tax* benefits under Sections 80C and 10(10D) of the Income Tax Act, 1961 as per the prevailing tax* laws.
Features of ICICI Pru Gold plan
ICICI Pru Gold is a participating endowment insurance plan that offers the below benefits:
Choice of 3 customisable plan options
ICICI Pru Gold plan offers three plan options~ to choose from basis your requirements.
- Immediate income: The immediate income option offers a regular income~ at the end of every policy year or month. This income starts from the first policy year and continues till the end of the policy term. You also get a lump sum on maturity^
- Immediate income with booster option: In addition to the immediate income option mentioned above, this option offers a guaranteed~ amount as booster every fifth policy year
- Deferred income option: In this option, you can choose to defer your income. You can choose to receive your income from as early as the second policy year or as late as Premium Payment Term plus 1 year, as per your requirements. You also get a lump sum at the time of maturity^
~ T&Cs Apply
Unique savings wallet$
The plan offers you a savings wallet$ in which you can choose to accumulate your benefits instead of taking it as a payment during the policy term. This money in the wallet earns interest as per the reverse repo rate published on the RBI’s website as on the review date. The money can be used to offset@ your future premium as well. You can also partially or completely withdraw the money from the wallet whenever you want
Option to earn guaranteed~ boosters and bonus#
The plan offers additional amounts in the form of bonuses#, guaranteed~ boosters, and terminal bonus. This increases the overall returns from the plan
~ T&Cs Apply
Tax* benefits on the premiums paid and payouts received
The premiums paid under the policy qualify for deductions from your gross taxable income, subject to conditions under Section 80C. The benefits received qualify for tax* benefits under Section 10(10D) of the Income Tax Act, 1961, per the prevailing tax* laws
Life cover5 for the entire policy term to secure your loved ones
This endowment plan comes with a life cover5 that secures your loved ones in case of an unfortunate event throughout the policy term
W/II/0005/2023-24
Conclusion
If you are looking for the triple benefits of investment, insurance, and tax* savings, endowment plans are a perfect choice. When you think about buying one, you can consider the advantage of guaranteed3 returns with the ICICI Pru Lakshya Lifelong Income plan. The capital you invest stays secure with the guaranteed3 sum assured at maturity1. Regular bonuses2 grow your wealth. And having a regular source of income3 until you reach 99 years of age ensures financial freedom even after retirement. All this, along with the benefit of financial protection through a life cover5, makes this policy an all-rounder. It helps you meet all your financial goals at one go. So invest today for a protected and secured future of your loved ones.
3 T&Cs Apply
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