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Why are Endowment Plans the Preferred Saving Tool?

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Why are Endowment Plans the Preferred Saving Tool?
September 22, 2022

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The COVID-19 pandemic opened our eyes to the importance of saving. The lasting economic impact of the pandemic and the subsequent war has made financial planning all the more vital. Most earning people today do their best to not only save but also invest their income to secure their financial future, especially their golden years. But understanding investments and safely making the right moves can seem difficult, especially for individuals who do not have significant knowledge about the market and how it functions. To help people in their quest for financial security and independence, insurance companies offer endowment plans. These policies offer both life cover and guaranteed returns, making them one of the most popular saving tools today.

What Are Endowment Plans?

An endowment policy is a life insurance plan that also enables the policyholder to build up savings for the future. Should anything happen to the insured during the policy tenure, their nominee receives the sum assured amount. The payout will allow them to meet immediate or future financial goals. If the insured survives the policy term, they receive a maturity benefit.

Why Are People Opting for Endowment Plans?

An endowment policy offers the insured multiple benefits. Let’s see what they are:

  • Life Cover

    Endowment plans are predominantly insurance policies, so they provide life coverage to the insured. If anything were to happen to you, the policyholder, while the plan is active, your nominee receives a payout of the sum assured and any bonuses you are eligible for at that time.

  • Guaranteed Returns

    Endowment plans offer a guaranteed return to the policyholder when they survive the policy. The amount you are eligible to receive depends on the type of endowment plan you choose.

  • Goal-Based Savings

    With an endowment policy, you can choose to build up a corpus for a specific goal. For example, you may choose a 15-year policy to help you save up for your child’s higher education. On the other hand, if you’re saving up for your own retirement, you might choose a 30-year policy instead. You can purchase multiple endowment plans to help you safely save and invest for different financial goals.

  • Enhanced Protection

    You can choose to increase your life coverage by purchasing add-ons or riders with your endowment plan. These riders will boost your sum assured and also cover various scenarios that your base policy may exclude.

  • Tax Benefits

    Since endowment plans fall under the purview of life insurance policies, you are eligible to claim tax deductions on the premiums paid, under Section 80C of the Income Tax Act, 19612. In addition to that, if you’ve opted for any health insurance riders, the rider premium can also be claimed as deduction under Section 80D of the Income Tax Act, 19612. Both of these deductions can help lower your tax liability.

    Moreover, the maturity/death payouts received under an endowment policy are exempt from tax under Section 10(10D) of the Income Tax Act, 1961# subject to the conditions mentioned therein.

HDFC Life Sanchay Plus – The Secure Endowment Plan

If you are looking for a safe and secure avenue to invest your money for the future, you can consider HDFC Life’s Sanchay Plus** policy. The non-linked and non-participating policy provides policyholders with flexibility, assured returns, regular income and more.

Let’s look at how this policy can secure your family’s financial future:

  • Flexible Claims

    HDFC Life Sanchay Plus allows you to choose how you will receive the guaranteed benefit. You can opt for a lump-sum payout or choose regular monthly payments instead. You can pick the payout option that works best for you based on your financial needs.

  • Long-Term Income

    If you’re looking for a safety net during your retirement, this plan has a long-term income option. Policyholders can choose to receive a guaranteed income for up to 30 years, providing some breathing room to deal with inflation or unforeseen costs in the future.

  • Income for Life

    Mortality rates are rising in India and across the world and HDFC Life’s Sanchay Plus policy understands this. The plan offers a life-long income option, ensuring the policyholder receives a guaranteed income until the age of 99.

  • Customisable Riders

    For enhanced protection, you can choose to pay for riders like accidental death, accidental disability or critical illness covers.

  • Tax Benefits

    HDFC Life’s Sanchay Plus endowment policy is eligible for tax benefits as per the Income Tax Act, 19611.

  • Free-Look Period

    If you want time to evaluate your options, you can use the 15-day free-look period. Once you purchase the policy, you have up to 15 days to decide whether you’d like to continue with it or not. If you choose to cancel the policy during this time, you will not have to pay any penalties.

Choosing to invest in an endowment plan provides policyholders with complete peace of mind. Since most endowment plans are non-participating, you don’t have to worry about market fluctuations. Instead, you can save and invest knowing that you will enjoy guaranteed returns on maturity. In the meanwhile, if anything should happen to you, the life cover part of the policy will provide your family with financial security.

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DISCLAIMER

1. Tax benefits are subject to changes in tax laws.

2. Tax benefits are subject to conditions specified u/s 80C & 80D of the Income Tax Act, 1961.

# The customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

 

**HDFC Life Sanchay Plus (UIN:101N134V14) is a non-participating, non-linked savings insurance plan. Life Insurance Coverage is available in this product.

ARN - ED/09/22/29362

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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