Best Endowment Plans to Invest in India

Endowment plans are insurance policies that provide financial security and guaranteed returns over a specific period. These plans are an excellent choice for individuals looking to save for their future financial goals while ensuring protection for their loved ones.

What are Endowment Plans?

An endowment plan is a life insurance policy that combines insurance coverage and savings. It allows policyholders to pay premiums over a fixed period, known as the premium payment term. At the end of the policy term, the policyholder receives a lump sum payment called the maturity benefit. If the policyholder passes away during the policy term, their nominee gets the sum assured as a death benefit.

Best Endowment Plans in India 2024

Several insurance companies offer endowment plans with varying features and benefits. Here are some of the best endowment plans available in India in 2024:

1. Aviva Dhan Nirman Endowment Policy
2. AEGON Life Premium Endowment Policy
3. Exide Life Jeevan Uday Plan
4. BSLI Vision Endowment Plan
5. Bharti AXA Life Elite Advantage Plan

Overview of Top Endowment Policies in India

● Aviva Dhan Nirman Endowment Policy: This policy from Aviva Life Insurance offers guaranteed annual payouts to policyholders after the premium payment term ends. For instance, if the policy term is 20 years and the premium payment term is 15, the policyholder will receive annual payouts from the 16th year onwards until maturity. At the end of the policy term, the policyholder will receive a guaranteed lump sum maturity benefit in addition to the earlier annual payouts. Furthermore, this plan also provides a Simple Reversionary Bonus, declared at the end of the first policy year and added to the maturity benefit, thereby boosting the overall returns.

● AEGON Life Premium Endowment Policy: This is a participating endowment plan from AEGON Life Insurance, which means that policyholders can participate in the company's profits through bonuses. The plan offers three premium payment options – single pay, regular pay, and limited pay. During the Premium Paying Term (PPT), the policy accrues Guaranteed Additions, which are added to the maturity benefit, thereby enhancing the overall returns. The plan also can earn additional bonuses, depending on the company's performance.

● Exide Life Jeevan Uday Plan: The Exide Life Jeevan Uday Plan is a savings-oriented endowment plan that provides life insurance coverage for the entire policy term. It offers guaranteed, tax-free maturity benefits and subject to applicable tax laws. Additionally, the plan provides extended life insurance coverage even after the maturity date, up to the age of 100 years. Policyholders also have the option to take a loan against the policy's surrender value. One of the unique features of this plan is that no medical examination is required to purchase it, making the application process hassle-free.

● BSLI Vision Endowment Plan: The BSLI Vision Endowment Plan is a participating plan from Birla Sun Life Insurance, which means that policyholders can benefit from the company's profits through bonuses. This plan offers a limited premium payment option, which allows policyholders to pay premiums for a shorter duration than the policy term. For instance, if the policy is 20 years, the premium payment term could be 10 years or less. The plan includes an Accidental Benefit Rider, which provides additional protection in case of accidental death or disability. Furthermore, it offers simple reversionary, interim, and terminal bonuses to boost the corpus and enhance returns.

● Bharti AXA Life Elite Advantage Plan: This is a non-participating endowment plan from Bharti AXA Life Insurance, which means that the returns are not dependent on the company's profits. However, the plan offers Guaranteed Yearly Payouts, a proportion of the Sum Assured. These payouts commence from the end of the policy term and continue until the 19th year. For instance, if the policy term is 10 years, the Guaranteed Yearly Payouts will start from the 11th year until the 19th year. At the end of the 20th year, the policyholder receives the entire Sum Assured as a lump sum maturity benefit.

Why Should an Individual Buy an Endowment Policy?

Endowment policies offer several benefits that make them an attractive investment option. They provide life insurance coverage to the policyholder's family in case of an unfortunate event. Additionally, they offer a lump sum maturity amount if the policyholder survives the policy term. Endowment plans also help in accumulating wealth and achieving long-term financial goals. They offer risk-free returns and tax benefits under certain conditions, making them suitable for risk-averse investors.

Types of Endowment Policies:

● Unit-Linked Endowment Plan: In a Unit-Linked Endowment Plan, a portion of the premium paid by the policyholder is invested in various market-linked funds, such as equity funds, debt funds, or balanced funds. The policyholder can choose the funds based on their risk appetite and investment goals. The returns on the invested portion are subject to market fluctuations, and the maturity benefit or death benefit depends on the performance of the chosen funds.
These plans offer the potential for higher returns compared to traditional endowment plans, but they also carry a higher risk due to market volatility. They suit individuals with a moderate to high-risk appetite and a longer investment horizon.

● Full Endowment Plan: A Full Endowment Plan is a traditional endowment policy where the sum assured is equal to the death benefit from the start of the policy. In other words, if the policyholder passes away during the policy term, the nominee receives the sum assured as the death benefit.
At maturity, the policyholder receives the sum assured and any bonuses or additions declared by the insurance company. These bonuses are based on the company's profits and investment performance. The final payout may be higher than the sum assured, depending on the bonuses declared.
Full Endowment Plans offer a combination of life insurance coverage and savings, making them suitable for individuals seeking a balance between protection and wealth accumulation.

● Low-Cost Endowment Plan: A Low-Cost Endowment Plan, also known as an Endowment Assurance Plan, is designed for individuals who want to accumulate funds for a specific financial goal, such as paying off a mortgage or funding a child's education. These plans typically have lower premiums than other endowment plans, making them more affordable.

The policyholder pays premiums for a fixed term, and at the end of the term, they receive a lump sum amount, which can be used to meet the intended financial goal. These plans do not offer substantial life insurance coverage but provide a disciplined savings avenue with guaranteed returns.

● Non-Profit Endowment Plan: A Non-Profit Endowment Plan is a traditional endowment policy offered by insurance companies that operate on a non-profit basis, such as Life Insurance Corporation (LIC) of India. In these plans, the returns are not influenced by the company's profits or market performance.
The policyholder pays premiums for a fixed term, and upon maturity, they receive the sum assured as a lump sum payment. In case of the policyholder's death during the policy term, the nominee receives the sum assured as the death benefit.

Non-Profit Endowment Plans offer a fixed and guaranteed return, making them suitable for risk-averse individuals prioritising certainty over potentially higher returns.

Documents Required for Endowment Policy:
To apply for an endowment policy, you will typically need to submit the following documents:

● Fully filled out Application/Proposal form: This form captures essential details about the policyholder, such as personal information, employment details, and the chosen policy specifications.

● Photograph: A recent passport-size photograph of the policyholder is required for identification purposes.

● Proof of residence/address proof: Documents such as a utility bill, ration card, or passport can be used as proof of residence.

● Proof of age: A birth certificate, passport, or any other government-issued document verifying the policyholder's age.

● Medical reports (if required): Depending on the insurance company's underwriting guidelines and the sum assured, medical reports or test results may be required, especially for individuals above a certain age or with pre-existing medical conditions.

Points to Consider Before Choosing Endowment Plans:

When selecting an endowment plan, it is crucial to consider the following factors:

● Your financial needs and goals: Assess your current financial situation, future goals (such as retirement planning, child's education, or mortgage payments), and the time horizon for achieving these goals. This will help you determine the appropriate plan and ensure the required sum.

● Premium amount and affordability: Endowment plans typically have higher premiums than pure-term life insurance policies. Evaluate your budget and ensure the premium is affordable and sustainable over the policy term.

● Insurance provider's claim settlement ratio: Research the insurance company's claim settlement ratio, which reflects their efficiency in settling claims. A higher claim settlement ratio indicates a more reliable and trustworthy provider.

● Periodic payout options: Some endowment plans offer periodic payouts during the policy term in addition to the lump sum maturity benefit. Consider if you require such periodic payouts to meet your financial needs or if a lump sum payment at maturity is sufficient.

● Additional benefits: Evaluate the benefits offered by different endowment plans, such as partial withdrawals, policy loans, riders for critical illness or accidental cover, and bonuses or additions that can enhance the overall returns.

Conclusion

Endowment plans provide a systematic way to save for future financial goals while ensuring life insurance coverage. They offer guaranteed returns and tax benefits, making them an attractive investment option for risk-averse individuals.