Endowment Plans

1. Definition: Endowment plans are life insurance policies that provide a combination of insurance coverage and savings. They pay out a lump sum upon maturity or death of the insured.
2. Maturity Benefits: If the policyholder survives the policy term, a lump sum amount is paid out at maturity. This includes the sum assured along with any bonuses.
3. Death Benefits: In case of the policyholder's death during the policy term, the nominee receives the death benefit, which is the sum assured plus any applicable bonuses.
4. Premiums: Premiums for endowment plans are typically higher than term insurance because they include a savings component. Premiums can be paid monthly, quarterly, half-yearly, or annually.
5. Bonuses: Bonuses are additional amounts added to the sum assured based on the insurer's performance. They can be reversionary bonuses (added annually) or terminal bonuses (paid at maturity or death).
6. Savings Component: Endowment plans help in building a corpus for future financial needs, such as children's education, marriage, or retirement, by providing a disciplined savings mechanism.
7. Tax Benefits: Premiums paid towards endowment plans are eligible for tax deductions under Section 80C of the Income Tax Act. The maturity proceeds are also tax-free under Section 10(10D).
8. Loan Facility: Policyholders can avail loans against their endowment policy, providing financial flexibility in times of need without having to surrender the policy.
9. Riders: Additional benefits or riders, such as critical illness or accidental death benefit, can be attached to endowment plans to enhance coverage.
10. Financial Security: Endowment plans offer financial security and peace of mind by combining the benefits of life insurance protection and savings, ensuring long-term financial stability.

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