All you want to know about endowment insurance plan

1. What is an endowment insurance plan?

An endowment policy covers risk for the specified period at the end of which a person insured receives the sum assured plus all the accrued bonuses. Endowment are considerably more expensive (in term of annual premiums) than either whole life or term plan. In case of death during the tenure, sum assured with bonus is paid to the nominee.
            
Endowment plans have two types of bonuses:

- Reversionary bonus: Also called regular bonus, this is annual bonus which depends on the performance of the insurer and is added to the fund every year payable at the end of policy period.
 
- Terminal bonus: An additional loyalty bonus offered by the insurer at the end of policy term

2. Are there any bonus payouts in the endowment policy?

Endowment plans have two types of bonuses:

• Reversionary bonus: Also called regular bonus, this is annual bonus which depends on the performance of the insurer and is added to the fund every year payable at the end of policy period.
• Terminal bonus: An additional loyalty bonus offered by the insurer at the end of policy term                                                                                                           

3. What types of riders are included in insurance policy?

Riders are the additional benefits added to policy but you have to pay an extra premium for it. Various riders under insurance company are: critical illness rider, accidental death and dismemberment rider, partial or permanent disability, waiver of premium rider.              

4. What are the kinds of plans under the endowment insurance plans?

Endowment plans provides various plans according to the need such as double endowment policy, education endowment policy, marriage endowment policy, unit linked endowment, full endowment and low cost endowment.

5. Who should go for an endowment policy?

If you are looking for a cover which gives you additional benefits along with life cover then endowment plan would be best suited for you.

6. Term insurance Vs endowment?

• The basic feature of term insurance policy is that it provides death risk cover, whereas endowment policy covers life along with other risk such as accident, permanent disability.
• The claim to the nominee is assured only if there is sudden death, but if the insured survives till maturity then no claim is paid. In endowment plan the claim is paid in both the conditions.
• Endowment plan charges more premiums then the term insurance, since the money is invested in various instruments.
• Insurance should never be associated with investment and in term insurance you have no investment, while endowment will deduct your money in investment, mortality, insurance and return you some part of income on maturity.