🚂 Current Fix Deposit Rates 🌞 SBI - General Citizen 3% to 7.10% Senior Citizen - 3.60% to 7.60% 🌞 HDFC - General - 3.00% to 7.40% Senior Citizen - 3.50% to 7.90% 🌞 ICICI - General - 3% to 7.10% Senior Citizen - 3.50% to 7.60% 🌞 PNB - General - 3.50% to 7.25% Senior Citizen - 4% to 7.75% 🌞 Kotak Mahindra - General - 2.75% to 7.20% Senior Citizen - 3.25% to 7.70% 🌞 Axis - General - 3.50% to 7.10% Senior Citizen - 3.50% to 7.85% 🌞 Bank of Baroda - General - 3% to 7.25% Senior Citizen - 3.50% to 7.55% 🚂 Current Recurring Deposit Rates 🌞 SBI - General 4.40% to 5.50% Senior Citizen 4.90% to 6.20% 🌞 ICICI - General 3.50% to 5.50% Senior Citizen 4% to 6.30% 🌞 HDFC - General 4.40% to 5.50% Senior Citizen 4.90% to 6.25% 🌞 KOTAK - General 4.30% to 5.20% Senior Citizen 4.80% to 5.70% 🌞 AXIS - General 4.40% to 5.75% Senior Citizen 4.65% to 6.50% 🌞 IDBI - General 7% to 7.15% Senior Citizen 7.50% to 7.65% ☁️ National Pension Scheme - 9% to 12% pa ☁️ Employees Provident Fund - 8.15% pa ☁️ Public Provident Fund - 7.1% pa Endowment Policy

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Endowment Policy

 

What is endowment policy ?

An endowment policy is a type of life insurance plan that combines elements of insurance and investment.  An endowment policy provides lump sum at the time of maturity.  It is an investment plan along with life cover.  It is provide initially define return at the time of investment.  An endowment policy provide life courage amount to the nominee, if the policy holder passes away.

Some are the key features of Endowment Policy:

Insurance Coverage:

An endowment policy provides a death benefit to the policy holder, in case the death of policy holder during the policy term, the beneficiary or nominee will get the insured amount plus all the premium paid along with the bonus.  It ensures the financial protection for the family or dependents of the policy holder.

Investment Components”

An endowment policy is purely designed for investment, a portion of the premiums paid by the policy holder goes towards in low risk bonds, fixed income securities or sometimes equities depends upon type of endowment policy has been taken.

Maturity Benefit:

At the time of maturity the lump sum amount or initially define amount and bonus earn will provide to the policy holder.  In short it consists the guaranteed amount plus returns earned on the investment over the policy term.

Savings and Wealth Accumulation:

An endowment policy is long term savings and wealth accumulation policy and disciplined savings by investing equal regular premium over the policy term period.

 Tax Benefits:

The premiums paid during  the policy are eligible for tax deductions under section 80C of the Income Tax Act.  The returns amount at the time of maturity are tax free under section 10D.

 Surrender Value:

If the policy holder decides to terminate the policy before its maturity can receive a certain portion of the premiums paid with accrued bonuses.

Endowment policies are popular in India because they offer both insurance protection and a means of long-term savings. However, they may not offer the same level of returns as pure investment products, and the premiums tend to be higher compared to term insurance due to the savings component. It's essential for individuals to carefully assess their financial goals and risk tolerance before investing in an endowment policy.

Example:

John, a 29 year old professional working in a pharmaceutical company, he wants to invest in a policy which is achieve his investment aim and secure his family’s financial future behind him.  After considering various policies, he decides to go with the endowment policy.

Policy Details:

Sum Assured: John opts for a sum assured of  Rs. 10,00,000 which will be paid out to his family in case of his untimely demise during the policy term.

Policy Term: He chooses a policy term of 20 years.

Premium Payment: Annual premium of Rs. 50,000 for the next 20 years.

Maturity Benefit:  At the time of maturity the if the John survive the entire term of the policy, he will receive the maturity amount that is Rs, 10,00,000 along with bonuses earn on the investments over the year.

Tax Benefits: John can avail tax deductions on the premiums paid under Section 80C of the Income Tax Act. And the maturity amount will be tax free under section 10D.

Surrender Value: In case John decides to surrender the policy before its maturity, he can receive a surrender value, which will be a portion of the premiums paid along with accrued bonuses.

Insurance Benefit:  If John passes away during the policy term, his family or nominee receives the insurance amount that is Rs. 10,00,000 and bonuses on investments.

Types of endowment policy

Unit Linked Endowment Plan

Unit Linked policies are linked with market and depends upon the market fluctuations.  Since it is depends upon market the risk is high.  Premiums paid by investors are divides into several units. In this plan the maturity benefits totally depends upon the market performance.

Full Profit Endowment

In this plan the policy holder will get the total sum insured and bonuses declared by the financial institution.  This plan is total risk free or guaranteed.

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