How Does an Endowment Policy Work?
An endowment insurance policy is a type of savings policy that allows you to receive a lump sum benefit on maturity. You get to choose an endowment with a policy term, premium payment flexibility and total sum assured of your choice. Moreover, you can also select some optional riders^ to add to your endowment life insurance policy to enhance its coverage. The riders are useful as they enable you to handle sudden emergencies such as a critical illness or accidental death, or disability without interrupting your savings.
The insurance company manages the investment component of the premiums paid by you, to provide a steady return on your investment. Your savings fund grows with the passing years as you pay your premiums regularly, and this also lets you protect your family from financial uncertainties. Moreover, in case of your untimely death during the policy term, your family will be taken care of by the guaranteed death benefit sum assured.
However, if you survive the term, a lump sum benefit, which is your savings fund, is paid out to you as an endowment benefit. With the help of this endowment benefit, you can plan major purchases and fulfil your goals or make investments of your choice.