Endowment Insurance Tax

• Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
• Claim up to Rs. 1,50,000 deduction under section 80C**
• Choose between annual and monthly premium payment options

An endowment policy is a type of insurance policy which offers both the option of insurance and investment. A part of your premiums is used for insurance purposes and the rest is used to be invested in a common fund from where you receive decent returns. An endowment plan can be a very good option for you if you have long-term goals.

In case something happens to you, your nominee receives a lump-sum amount called the death benefit. If you survive the term, you get to receive the maturity benefit including various other benefits. The returns under endowment policies are decent in nature and you will see a regular sum of money being credited to your account.

There are various types of endowment plans that you can purchase for yourself. They are:

• Full endowment policy
• Endowment assurance policy

• Limited payment endowment policy
• Limited assurance endowment policy
• Double endowment policy
• Joint life endowment policy
• Non-profit endowment policy

• Unitised with profit endowment policy
• Unit linked endowment policy
• Non-profit endowment policy

Advantages of endowment plans

There are various advantages of having an endowment plan. The first one is that it offers a dual benefit of insurance and investment. Not only does it provide protection but also ensures that you receive a regular sum of money which would allow you to take care of your future needs.

Endowment policies are very safe in nature. Your money is invested in tools which are low risk and hence the returns are decent. Purchasing an endowment plan also instils in you the sense of financial discipline as you are bound to pay your premiums on a timely basis.

Some of the other advantages of purchasing an endowment plan are that you can enjoy facilities such as availing a loan against your policy in case of a cash crunch. The policies are highly liquid in nature and you also get the option to choose the frequency at which you would like to pay premiums. On purchasing an endowment plan you can also enhance your cover by buying rider or add-on cover.

Tax benefits under an endowment policy

You can enjoy double tax benefits on purchasing an endowment policy. You can avail tax benefits under Section 80C of the Income Tax Act, 1961 on the premiums paid by you. Similarly, you can also enjoy tax exemptions under Section 10 (10D) of the Income Tax Act, 1961.

Endowment plans are brilliant options if you have long-term goals to fulfil. If you are a businessman, or some other salaried person like a doctor, or a lawyer, then it is ideal that you purchase an endowment policy. It is also recommended that you stay invested in an endowment plan for a longer duration of time to enjoy its benefits.

In the end, purchasing an endowment plan can be a brilliant investment option for you. However, you must evaluate your needs before purchasing an endowment plan. You must take into account your financial capabilities, other requirements, and based on that you should compare various other plans. Once you are sure that an endowment plan can be the best option for you, you can then go ahead and purchase the policy for yourself.