When it comes to purchasing life insurance policies, many people think of an endowment plan that offers both insurance protection and savings provisions. But before opting out for any policy, you must understand the nitty-gritty as well as all the pros and cons of the policy. Here in this article, let’s enlist few things that have to be checked before buying Endowment Policy.
Endowment plan allows you to save money in a systematic way for your future financial needs, accompanied by the life coverage. The insurance is the most important factor that takes care of your family or loved ones behind you. It is seen that the returns from an endowment plan are comparatively lower than other cash value plans, but the best thing is, they are guaranteed! There is no risk associated with getting the adequate returns. Tax benefits can also be availed along with it.
This is the reason behind why the low risk appetite people choose an endowment plan. But again, as said earlier, few things have to be understood such as-
- Today, almost all of the insurance companies offer endowment plans with similar characteristics. But, only a few insurance companies offer the plans that really suit your requirements. Always consider some fundamental factors while choosing the plan such as your current lifestyle, needs, monthly income, and most important risk appetite.
- You should always check the premium rates charged by different insurers for the endowment plans. Though these policies are costlier than term plans, some insurance companies may offer endowment plans slightly cheaper than other players. A small mistake in analysing the premiums may fall costlier for long-term.
- Checking insurer’s past record is another important thing that you should bear in mind, with respect to several benefits and bonuses. Since endowment plans offer lesser returns than ULIPs, bonuses is the other part than may add more value to the returns you are entitled to get.
- Similarly, claim settlement ratio, customer services are also the important things. IRDAI gives ratings to the insurance companies and displays record of the company along with the claim settlement ratio every year. Always check IRDAI site before going for a specific insurance provider and its endowment plan.
At the end, always try to find a simple yet comprehensive endowment plan to avoid further complexities in the process and getting benefits. Because, unless there’s a clarity in the specifications, you’ll never get the appropriate benefits from the plan.