Endowment Insurance Ka Hindi Meaning

Endowment Insurance Ka Hindi Meaning: Everything You Need to Know

Endowment Insurance is a type of life insurance policy that provides both protection and savings to the policyholders. It is a popular type of insurance in India, and the Hindi meaning of Endowment Insurance is एंडोवमेंट बीमा.

In this article, we will take a closer look at Endowment Insurance Ka Hindi Meaning, how it works, its benefits, and drawbacks, and everything else you need to know about this type of insurance.

What is Endowment Insurance?

Endowment Insurance is a type of life insurance policy that provides both protection and savings to the policyholders. It is a long-term investment that pays a lump sum amount to the policyholder at a specified date or upon the death of the policyholder, whichever comes first.

Endowment policies are a popular choice for people who want to save money for a specific goal, like a child’s education, marriage, or retirement. They are also used as a tool for estate planning, as the death benefit can be used to pay off debts, taxes, or provide for the beneficiaries.

How Does Endowment Insurance Work?

When you buy an endowment policy, you pay a premium every year for a specific period, usually between 10 to 30 years. The premium amount depends on various factors like your age, health condition, and the sum assured you choose.

The sum assured is the amount that will be paid to your beneficiaries upon your death. It is usually a multiple of your annual premium and can range from 5 to 20 times the premium amount.

In addition to the sum assured, endowment policies also provide a guaranteed maturity benefit. The maturity benefit is the amount that will be paid to you upon the maturity of the policy, which is usually after 10 to 30 years, depending on the policy term.

The maturity benefit includes both the sum assured and the bonus declared by the insurance company. The bonus is a share of the company’s profits and is declared every year based on the company’s performance.

Types of Endowment Insurance Policies

There are two types of endowment policies – traditional and unit-linked. Let’s take a closer look at each.

Traditional Endowment Policies

Traditional endowment policies are the most common type of endowment policies. They provide a fixed rate of return on your investment, and the premiums you pay are invested in low-risk debt instruments like government bonds and fixed deposits.

The returns on traditional endowment policies are usually lower than other investment options, but they provide a guaranteed return, which makes them a popular choice for risk-averse investors.

Unit-Linked Endowment Policies

Unit-linked endowment policies are a type of endowment policy where the premiums you pay are invested in equity and debt funds. The returns on unit-linked policies depend on the performance of the funds, and there is no guaranteed return on investment.

Unit-linked policies offer higher returns than traditional endowment policies, but they also come with a higher risk. They are suitable for investors who are comfortable with market volatility and want to earn higher returns on their investment.

Benefits of Endowment Insurance

Endowment Insurance provides several benefits to the policyholders. Let’s take a look at some of them.

– Protection: Endowment Insurance provides life cover to the policyholder, which ensures that their loved ones are financially protected in case of their untimely death.
– Savings: Endowment Insurance is a long-term investment that provides a guaranteed return on investment. It helps the policyholders save money for a specific goal, like a child’s education or retirement.
– Tax benefits: Endowment Insurance offers tax benefits on both the premiums paid and the maturity benefit received. The premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act, and the maturity benefit is tax-free under Section 10(10D) of the Act.
– Loan facility: Endowment policies also offer a loan facility to the policyholders, where they can take a loan against the policy’s surrender value.

Drawbacks of Endowment Insurance

Endowment Insurance also comes with some drawbacks, which you should consider before investing. Let’s take a look at some of them.

– Low returns: The returns on endowment policies are usually lower than other investment options like mutual funds and stocks. If you are looking for higher returns, endowment policies may not be the best investment option for you.
– Long lock-in period: Endowment policies have a long lock-in period, usually between 10 to 30 years. If you need liquidity in the short-term, endowment policies may not be suitable for you.
– Surrender charges: Endowment policies come with surrender charges, which are deducted from the policy’s surrender value if you surrender the policy before the maturity date. The surrender charges can be high, especially in the initial years of the policy.

Conclusion

Endowment Insurance is a popular type of life insurance policy in India that provides both protection and savings to the policyholders. Its Hindi meaning is एंडोवमेंट बीमा. It is a long-term investment that pays a lump sum amount to the policyholder at a specified date or upon the death of the policyholder, whichever comes first.

Endowment policies come with several benefits like life cover, savings, tax benefits, and loan facility, but they also have some drawbacks like low returns, long lock-in period, and surrender charges. If you are considering investing in an endowment policy, carefully consider its pros and cons and choose a policy that suits your investment goals and risk profile.