A You will be pleased to hear that no, you won’t face a tax bill on the proceeds when your policy matures. Although the fund that your regular premiums are invested in pays tax, the proceeds are tax-free at maturity, even if you are a higher rate taxpayer. …

What is the main benefit of an endowment policy?

“The key benefits of any endowment plan include financial protection of loved ones, goal-based savings, tax benefits under section 80C and 10(10D) of the Income Tax Act and the options to obtain loan against the policy, in case of any financial emergency,” says Rushabh Gandhi, director – sales & marketing, IndiaFirst …

What are the features of endowment policy?

Life cover: Endowment plans pay a lump sum amount to the nominee in case of an unfortunate event with the policy holder. Maturity benefits: The unique feature of endowment plans is that they guarantee benefits upon maturity.

What happens when your endowment policy matures?

If you take out an endowment policy, you’ll pay into it for 10-25 years. When the endowment matures, you’ll usually get a cash lump sum. Alternatively, you’ll receive the money to pay off your interest-only mortgage. Some people might decide to sell their endowment policy before it matures.

Should I buy endowment?

One of the major reasons why one should buy an endowment plan is that it provides an opportunity to save money in a disciplined way to fulfill the future financial needs. An endowment plan may give you lower returns but the investment associated risk is very low in an endowment plan.

What is double endowment policy?

The plan is a non-participating guaranteed return limited payment endowment assurance plan. The policy holders receives guaranteed sum of double the sum assured amount at the maturity of the policy.

Can you cash in endowment policy early?

Surrendering your endowment: You can cancel your policy before it matures. Your provider will give you a lump sum, but this is likely to be much less than the amount you would get at maturity.

Why are endowment plans bad?

By design, endowment policies are debt-heavy—that is, they invest only in approved debt or government securities, and not equities. Consequently, they cannot generate returns comparable to Ulips with an equity component.