What is endowment insurance?
An endowment plan is a kind of life insurance policy where the insurer pays out maturity benefits to the policyholder if s/he survives the policy period, or pays the beneficiaries if the policyholder passes away during the policy term. Endowment plans provide the policyholder with life cover during the policy tenure, so in the event that the policyholder passes away, the beneficiaries are paid the sum assured by the insurance provider. If the insured individual were to survive the policy tenure, the insurance provider pays a maturity amount.
How to find the right plan?
When you are looking for an endowment cover, you are bound to find a variety of options in the market. Since the benefits offered by every product is different, you need to you compare the options to ensure you end up with the right plan.
Here are a few things you need to look out for when you compare endowment policies:
- Returns - Besides the sum assured, endowment policies usually come with bonuses. It must be noted that the amount of bonus you receive depends on the kind of policy you choose. Traditional insurance plans can either be participatory or non-participatory. The premium rates for non-participatory plans are lower when compared to participatory ones.
- Premium rates- Given that the premium rates for such plans costs much more than term plans, it becomes all the more necessary to take the cost factor into account. You need to find a policy whose payments you can afford in the long run.
- Claim settlement record- The claim settlement ratio tells you about the number of claims an insurer has settled from the total number of claims it has received. It is always advisable to look for insurance companies with high claim settlement ratio.
Besides the above mentioned factors, take into consideration the insurance company’s customer service, financial status and track record of bonus payments. Also, read through the fine print so that you don’t miss out on anything important.