What is Endowment Insurance
You can profit and protect yourself simultaneously when you choose coverage under an endowment insurance plan. Endowment protection is a type of term-life insurance plan where a policyholder receives a lump sum payment after a specific time, or the policyholder’s family receives remuneration if the policyholder dies. If a policyholder is still alive after a certain time period, he or she receives the lump sum payment. Otherwise, the amount will be given to the plan’s named beneficiary.
The entry age for an endowment insurance plan can begin at 14 days old and spans to a maximum age of 80. It just depends on the company and the types of plans offered. However, most plans expire when a policyholder reaches 60 to 65 years of age. You can benefit financially from signing up for endowment insurance in one of various ways.
If you don’t wish to cash out on the earnings within the plan, some policies permit you to collect interest or to use the interest for investing in one of their unit trusts. Plans are also designed to be connected to a unit trust. These plans are known as investment-linked policies, and can assist you in collecting higher profits.
The payment that is paid for an endowment plan tends to be higher than other insurance products. That’s because of the lump-sum payment feature. Because you have the freedom to select your term’s duration, a shorter payment period will result in a higher payment on your policy. You can find out more about endowment insurance by researching products online.
Shortening the Length of the Policy
Some insurance companies permit you to pay for premiums during a shorter time period than the actual duration of the policy. As a result, you end up paying more for your premium over a shorter time span. In other words, you might be able to end up paying a premium for only six years on a 10-year insurance plan.
Because of its various features, an endowment insurance policy is designed more like a savings account. The savings component for endowment policies enable you to save for periods of 12 years, 15 years, 18 years, 21 years, 24 years, 27 years, or 30 years. For example, if you elect to take out an 18-year endowment policy, your savings will mature in exactly 18 years and the plan will be void. After those 18 years, you will receive your lump sum payment if you are still living.
Withdraw Your Money Regularly
Most endowment policies permit you to make regular withdrawals, which usually come about every three years. Like other whole-life type policies, you can also apply for a loan on the plan. However, regular withdrawals impact the outcome of your savings, as each withdrawal reduces the cash amount in the policy.
The Insurance Component
The insurance component of the policy is pretty transparent. In the event of either TPD (total permanent disability) or death, the insured’s beneficiary or the insured will be paid the stated amount. However, if you are diagnosed with an illness that is critical, the insurance company pays the premium of the endowment policy until you pass away.
Refer to your insurance company’s respective riders for specific scenarios, and review the terms and conditions in full so you can take advantage of this kind of plan.