Endowment Policy

Unit Linked Endowment plan is suitable for individuals who are willing to take more risk by investing in market funds. If market-linked plans and endowment meaning is clear to you, you might have an idea about a unit-linked endowment plan. A unit-linked endowment plan works like a market-linked investment scheme, wherein a part of the premium is used to buy units of investment funds. Consequently, the returns and endowment fund value depend on the NAVs (Net Asset Value) of the endowment fund.

As endowment meaning is known, this type of full-profit endowment plan mitigates the risk of market returns by providing an assured sum on maturity or on the untimely death of the policyholder. In addition to a sum assured, the policyholder is also entitled to the bonuses that are paid out from time to time and can be redeemed upon maturity or in the event of the untimely death of the policyholder.

As the name suggests, this type of endowment policy doesn’t offer bonuses and profits unlike the previous type of endowment policy. However, it does offer some guaranteed additions to the policyholder that can be redeemed on the maturity or the untimely death of the policyholder.

As the low-cost endowment meaning suggests, this type of plan is one of the most affordable endowment plans, given that it comes with a low premium. Yearly bonuses are also included in this.

This type of endowment plan also allows withdrawal in emergencies. Furthermore, this can be used to fund loan payments.

Some types of endowment insurance plans offer a lump-sum payout. The lump-sum payout can include the sum assured, and guaranteed additions provided by various types of endowment plans.

With an endowment plan, policyholders can buy additional riders to maximize their benefits. Riders offer various benefits to the policyholder in return for a nominal extra premium. Every insurance company provides different type of riders. However, some of the most commonly found riders include critical illness, waiver of premiums, and accidental death riders.

The pivotal characteristic of an endowment plan is that it provides both, survival benefit and death benefit. If the policyholder survives the policy term, they can get the maturity amount, and if they do not, the beneficiary gets the sum assured.

Whether you are someone who can afford to take more risks or someone who cannot, there are different types of endowment plans catering to every level of risk appetite, high or low. Unit linked endowment plan, for instance, is most suitable for individuals who have a high-risk appetite, while individuals with low-risk appetite can opt for the kind of endowment plan that mitigates market risks by providing a guaranteed sum.

Illnesses don’t come with a warning, all the reason why getting a critical illness cover can be highly beneficial if God forbid there’s a diagnosis. A critical illness rider provides a lump-sum payout to aid with the heavy medical costs of the treatment.

This type of rider provides an extra payout to the beneficiaries in case the policyholder suffers from a fatal accident – in addition to the death benefit the beneficiaries are already entitled to upon the untimely death of the policyholder

Disability caused due to an illness or accident can cause significant losses, both emotional and financial. A disability rider can mitigate the financial loss by offering an extra payout if such a mishappening occurs.

Death or critical illness can disrupt the premium payment following financial struggles caused by them. Waiver of premium rider, as the name suggests, waives off the future premium paying requirement if the policyholder is diagnosed from a critical illness, disability.

Hospitalization can cause significant financial stress. A hospital cash benefit provides some relief by offering a daily cash allowance in an event of hospitalization.

Note: Although these are the most common riders available, they still differ from insurer to insurer. In other words, not all insurance provides provide all the types of riders mentioned above.

It’s imperative to understand endowment meaning and your risk appetite before you buy an endowment policy, as the type of endowment plan you buy should depend on your risk appetite. If you have a high-risk appetite, then a Unit-Linked Market endowment plan is highly suggested.

An endowment plan gives you the liberty to choose your premium payment frequency. This means you can pay premiums annually, monthly, quarterly or semi-annually. This can be decided according to your budget, and convenience.

Policyholders can yield extra benefits by buying riders on top of their basic insurance policy. Ergo, when you are buying an endowment plan, choose your riders wisely.

For instance, a peek into the family medical history can determine if you should buy a critical illness rider, as critical illnesses can also be genetic. Additionally, an accidental death rider is also recommended if you commute through a vehicle on a regular basis.

Choosing a reliable insurance company is the most important element on the checklist. You wouldn’t want to pick an insurer with a poor claim settlement ratio as it puts your investment at risk. A high claim settlement ratio points to the increased probability of your claims getting settled by the insurance company.