Endowment Insurance Meaning In Gujarati

Endowment Insurance Meaning In Gujarati: A Comprehensive Guide

Endowment insurance is a type of life insurance policy that pays out a lump sum amount at the end of a specific term period, known as the policy’s maturity. Endowment insurance is a combination of insurance and investment, which makes it a popular choice for people who want to ensure a secured future for themselves and their family.

In Gujarati, endowment insurance is known as એન્ડોમેન્ટ બીમારી (endowment bimari). It is an insurance policy that provides financial protection to the policyholder in case of any unfortunate event that may occur during the policy term, such as death or disability.

How does Endowment Insurance work?

Endowment insurance works by providing a death benefit to the policyholder’s beneficiaries in case of their untimely demise during the policy term. The policy also provides a maturity benefit if the policyholder survives the policy term.

The policyholder pays a premium amount at regular intervals until the end of the policy term, which is generally between 10 to 30 years. The premium amount paid by the policyholder is invested by the insurance company in various investment options such as bonds, stocks, and mutual funds.

The returns generated from these investments are then added to the policyholder’s fund value, which grows over time. At the end of the policy term, the policyholder receives the maturity benefit, which is the sum assured along with the accumulated fund value.

Types of Endowment Insurance

There are two types of endowment insurance policies:

1. With-Profits Endowment Policies

With-profits endowment policies are those policies where the insurance company shares its profits with the policyholders. This means that the policyholder not only receives the sum assured but also a share in the company’s profits.

The bonus amount is added to the policyholder’s fund value, which increases the policy’s maturity benefit. The bonus amount is declared by the insurance company annually and is based on the company’s profits.

2. Unit-Linked Endowment Policies

Unit-linked endowment policies are those policies where the policyholder can choose the investment option in which their premium will be invested. The policyholder has the option to choose from various investment options such as equity funds, debt funds, balanced funds, and others.

The returns generated from these investments are added to the policyholder’s fund value, which grows over time. The policyholder receives the maturity benefit, which is based on the fund’s value at the end of the policy term.

Advantages of Endowment Insurance

1. Financial Protection

Endowment insurance provides financial protection to the policyholder’s family in case of their untimely demise. The death benefit paid by the insurance company can help the family to cover their daily expenses and plan for the future.

2. Guaranteed Returns

Endowment insurance provides guaranteed returns to the policyholder at the end of the policy term. The policyholder receives the sum assured along with the accumulated fund value, which ensures a secured future.

3. Tax Benefits

Endowment insurance policies offer tax benefits under section 80C of the Income Tax Act, 1961. The premium amount paid towards the policy is deductible from the policyholder’s taxable income, which reduces their tax liability.

4. Loan Facility

Endowment insurance policies offer loan facilities to the policyholders. The policyholder can take a loan against the policy’s surrender value, which can be used for any personal or financial needs.

Disadvantages of Endowment Insurance

1. Low Returns

Endowment insurance policies offer lower returns compared to other investment options such as mutual funds or stocks. The returns generated from endowment policies depend on the insurance company’s profits and the investment option chosen by the policyholder.

2. Long-term Commitment

Endowment insurance policies require a long-term commitment from the policyholder. The policy term is generally between 10 to 30 years, and the premium amount needs to be paid regularly until the end of the policy term.

Conclusion

Endowment insurance is an excellent investment option for people who want to ensure a secured future for themselves and their family. It provides financial protection in case of any unfortunate event and also offers guaranteed returns at the end of the policy term.

In Gujarati, endowment insurance is known as એન્ડોમેન્ટ બીમારી (endowment bimari), and it is essential to understand its meaning and working before investing in it. It is always advisable to compare different policies and choose the one that suits your financial goals and needs.