5 points to keep in mind when purchasing an endowment plan

Picking out the right endowment plan takes a lot of research and planning to make sure that you make the right choice. Here are a couple of points that you need to keep in mind when picking out an endowment plan for yourself:

• Important features and benefits of an endowment plan: One of the main features of an endowment plan is that this plan helps us save and plan for the future. On maturity of the policy, a lump-sum of money is given to the policyholder or nominee. This lump-sum of money can come in handy for various situations like clearing a debt, buying a new house, purchasing a new vehicle, marriage, etc. Another major benefit of an endowment plan is that money deposited under the endowment plan is exempt from tax deductions under Section 80C and (10D) of the Income Tax Act. You can also avail a loan against the endowment plan.
• Right circumstances for procuring an endowment plan: An individual should pick up an endowment plan depending on his/her financial status and financial needs. There are three main areas that you should cover when choosing the right endowment plan for yourself. These three areas are protecting and ensuring financial stability of your loved ones, building savings to reach investment goals, and surpass investment goals. Another point that you should make a priority is that you should pick up an endowment plan when you have a steady flow of income coming in every month. This will ensure that you will not miss out on any premiums that need to be paid.
• Needs of an endowment plan: Endowment plans are a great means to save money for your future needs. People who tend to spend a lot and at a frequent rate end up lacking the discipline needed to save their income. Endowment plans help ensure that you follow a very disciplined route that would eventually lead to a large payout from this plan. Anyone who is interested in saving their income and saving more under tax deductions can opt for such a plan.
• Here is why you need an endowment plan: Saving for an unforeseen future. No one knows what tomorrow has in store for us. Be prepared, ensure that you leave behind some form of monetary stability for your family and loved ones. There are tax benefits that a policyholder can avail after taking up an endowment plan. Endowment plans are risk free even though the plan may shell out lower returns.
• Points to keep in mind when picking up an endowment plan: There are a number of endowment plans that are offered in the market. As this can seem like a blessing, it can even be a curse. Making the right choice between these endowment options can be tiresome and frustrating. But, when you're picking out an endowment plan for yourself or for a third party, ensure that you factor in these points. Make sure that you compare the premiums of different endowment plans before you make a choice. This will help make it easier to choose an endowment plan. Also check the track record of the company issuing the endowment plan. Other factors to keep in mind are customer service, financial stability of the agency, and claim settlement ratio.

Consider opting for a simple and "easy to understand" endowment plan. There are a number of endowment plans offered by reputed companies and at different rates. Compare and chose the most suitable plan that meets your needs and requirements.