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An endowment plan serves dual purposes – life insurance and risk-free investment. It is one of the traditional life insurance policies, which benefit the policyholder with the sum assured after the maturity of the plan without any investment risk (if he or she survives the policy term). Otherwise, the entire sum assured is paid to the nominee after the death of the policyholder during the policy term to meet their non-negotiable needs of life.

 So, premiums to your endowment life insurance plan will help you to build a saving corpus to support you and your family financially after maturity, even in case of your unfortunate demise.

Why Should You Consider Buying Endowment Life Insurance Policies?

Are life-risk and investment risk only benefits of endowment life insurance plans? No, below are some additional benefits of endowment life insurance plans, which together make it an attractive saving plan option for the people:-

Bonus

Endowment Policy BenefitsThe word bonus is itself a captivating one, and when it adds to an insurance plan, it becomes more valuable. Bonus is an extra amount that is payable to the policyholder of the “with profit” endowment plan in addition to the proceeds by the insurance company. The amount of bonus depends on the availability of investment income, claims, and other expenses in a given financial year. Examples of bonuses include - Reversionary bonuses and Terminal bonuses.

Riders

In an endowment plan, you have an option to add additional riders to get some extra benefits under your policy. Examples of some of the riders, which help you to create your best endowment plan are:

Accidental Death Rider

As the name suggests, the nominee of your endowment plan can get an extra accidental death benefit along with the standard death benefit payable after your accidental death. 

Family Income Benefit

If you opt for this rider, then after your death, an amount equal to your monthly income is payable to the nominee of your policy.

Waiver of Premium

In case you suffer from any critical illness or permanent disability, then this rider waives you off from the payment of premium for your existing endowment life insurance plan.

Hospital Cash Benefits

As medical expenses are increasing day-by-day, this rider in the endowment plan can help you to get daily allowances, if you get hospitalized. Moreover, it also covers post-hospitalization expenses. 

Maturity Benefits

Based on certain factors like premium amount, policy term, age, etc. you can enjoy maturity benefits of your best endowment plan in which a guaranteed and tax-free maturity amount is payable to you upon maturity of the policy. 

"People should buy endowment plans for fixed returns guaranteed and tax benefit. They provide an IRR of 5.5-6% which is a great return if you take tax concession into account. Along with that, you also get insurance coverage. So, it is one of the best investments that anybody can make in such volatile markets. ULIPs are struggling to provide returns currently due to fall in equity markets”, says Naval Goel (CEO of PolicyX.com). 

Loan Benefit

 In case of a financial emergency, you can avail loan benefits with a competitive interest rate against your endowment life insurance plan after meeting certain conditions.

How Can You Choose Your Best Endowment Policy?

Multiple types of Endowment plans are available in the market with distinguished properties. Read the following plans to choose your best-fit.

Unit-linked Endowment Plan

This endowment plan is for risk-takers as the return on investment is dependent on market performance. Furthermore, under the particular investment fund, one part of the premium is taken away to insure the policyholder while the other one is saved as his investment. According to the choice of the policyholder, the premium is directed to multiple units.

With-profit Endowment Plan

This plan option offers the basic sum assured amount to the policyholder. The amount is guaranteed right from the start of the endowment plan. The final payment to the policyholder is comparatively higher as it may include a bonus too if any.

Low-cost Endowment Plan

The low-cost endowment plan is beneficial for those individuals who need to repay loans, mortgage, etc. In case of an unfortunate demise of the policyholder, the minimum sum assured is payable to the beneficiary.

Guaranteed Plan

As the name indicates, this plan offers a guaranteed face value to the policyholder or the nominee even if the former will not survive before the policy matures. So if you want risk-free investment, then this plan offers you guaranteed policy benefits. 

Know About What is Money Back Policy?

What Should You Keep in Mind When Buying an Endowment Life Insurance Policy?

Think About Your Goals

Before investing in any insurance plan, you must ask yourself some questions like - why do you need to buy this plan? Will it fulfil your needs?

Remember, the financial needs of an individual change at different stages of life. According to your financial goal, you must invest an amount in the plan. For example, if you are looking for better returns after the maturity of your endowment plan, then you need to pay higher premiums.

Early Planning is Key To Better Returns

The right planning at an early age can help you to build a large corpus of savings over time, which you receive upon the maturity of the policy. So, buy the best endowment plan before your 30s to get the maximum sum assured at the lowest cost.

Check The Flexibility

As per your employment, you can choose the frequency of your premiums for your endowment plan. It offers flexible options for payment like a monthly premium option for salaried individuals, or single premium payment options (in Single Premium Endowment Plan) for individuals having irregular wages or salaries.

Choose The Right Rider

Insurance companies provide multiple riders to attract potential customers. You have to pay some extra pennies for adding additional riders in your plan, so you must select the rider which matches your requirement and budget.

Read and Research Your Insurance Company

The Insurance Regulatory and Development Authority of India (IRDAI) regulates and promotes the activities of all life insurance companies in India. So, before hiring any insurance company, check and research the authorization of the company as well as its plans, bonuses, available riders, and more. Besides, you must check the reviews of experts on the particular endowment life insurance plan; you are planning to buy.

Which Are The Most Popular Endowment Plans in India 2020?

To help you in buying your best endowment insurance policy, the following table gives you a glimpse of some popular endowment plans in India along with their unique features:

BSLI Vision Endowment plan

Bajaj Allianz Endowment Plan

Bharti AXA Life Elite Advantage Plan

Single Pay Endowment Assurance Plan

Kotak Classic Endowment Policy

HDFC Life Sampoorn Samriddhi Plus

LIC Single Premium Endowment Plan

Entry age (min-max):

1- 55 years

Entry age (min-max):

1- 60 years

Entry age (min-max):

8 – 65 for 10 years policy term

6 – 65 for 12 years policy term

Entry age (min-max):

8 – 50 years

Entry age (min-max):

0 -55 years for regular pay only

0 -60 years for limited pay (except for PT/PPT combination of 15/7 years)

Entry age (min-max):

30 days – 60 years

Entry age (min-max):

90 days – 65 years

Maturity age (min-max): N/A

Maturity age (min-max):

18 -75 years

Maturity age (min-max):

75 for 10 years policy term

77 for 12 years policy term

Maturity age (max):

60 years

Maturity age (min-max):

18 -75 years

Maturity age (min-max):

18 – 75 years

Maturity age (max):

75 years

Policy term:

20 years

Policy term:

15 - 17 years

Policy term:

10 – 12 years

Policy term:

10 years

Policy term:

15 – 30 years

Policy term:

15 – 40 years

Policy term:

Min 10 years

Premium paying mode: monthly

Half-yearly

Yearly

Premium paying mode: Monthly*

Quarterly

Half-yearly

Yearly

Premium paying mode: Monthly**

Quarterly**

Half-yearly

Yearly

Premium paying mode:

Single pay

Premium paying mode: Monthly

Quarterly

Half-yearly

Yearly

Premium paying mode: Monthly

Quarterly

Half-yearly

Yearly

Premium paying mode:

Single-Premium only

Sum assured (min-max): Rs. 1,00,000 – No limit

Sum assured (min-max): Rs. 1,00,000 – No limit

Sum assured (min-max):

Depends on minimum premium - N/A

Sum assured (min-max):

Rs. 4,00,000*** – No limit

Sum assured (min-max):

Rs. 61,071 – No upper limit

Sum assured (min-max):

Rs. 65,463 – No upper limit

Sum assured (min-max):

Rs. 50,000 – No limit

Premium paying term:

7-10 years

Premium paying term:

5 years

Premium paying term:

5 years for 10-years Policy Term

7/12 years for 12-years Policy Term

Premium paying term: Single

Premium paying term:

Equal to policy term (regular pay)

7 years for policy term 15 years (limited pay)

Premium paying term:

Policy term less than five years

Premium paying term:

Single

* Available under salary deduction scheme & ECS

** Through auto pay only 

*** Sum assured is equal to 10 times the single premium paid

Now that you know how your endowment life insurance policy will benefit you in meeting your financial goals. So, what are you waiting for? Contact the customer care team of PolicyX.com and start investing in long-term life cover to get better returns.

Sindu Ramankutty has 10 years of Life Insurance Operations and Customer Service experience. She has worked with two leading private life insurers. She has a PGDBM (General Management) from Narsee Monjee Institue Of Management Studies (NMIMS) Global Access, Licentiate from Insurance Institute of India (III) and ALMI from LOMA.