Learn Everything About Endowment Policy: Important Details and Suggestions for You

The idea behind an endowment plan is to provide financial protection to loved ones while encouraging regular savings. These policies often come with bonus additions and guaranteed maturity benefits, making them attractive to individuals seeking disciplined financial planning along with insurance.

Importance – Why endowment policies matter today and who they benefit

Endowment policies are relevant today due to rising financial uncertainties and the growing need for stable, low-risk investment avenues. These plans serve multiple purposes:

• Savings with protection: Encourages systematic savings while ensuring life cover.

• Tax benefits: Premiums and returns may be eligible for tax deductions and exemptions.

• Guaranteed maturity benefit: Offers a predictable payout at the end of the term.

• Goal-based planning: Suitable for children's education, marriage, or retirement corpus.

Who it helps:

• Salaried professionals seeking long-term savings

• Parents planning for their children’s future

• Individuals with low-to-moderate risk appetite

• Anyone wanting insurance with guaranteed maturity

Recent Updates – Trends and news in 2024–2025

Several changes have impacted endowment policy structures and popularity over the past year:

• Digital onboarding: As of early 2025, many insurers like LIC and HDFC Life now offer fully digital purchase and servicing platforms, streamlining customer experience.

• Bonus rates reviewed: In 2024, insurers revised annual bonuses due to market performance, affecting long-term returns on participating policies.

• IRDAI simplified norms: Policy documents are now standardized and easier to understand, improving transparency for first-time buyers.

• Shift in preferences: Consumers are leaning toward guaranteed return products, increasing the demand for endowment plans in India post-pandemic.

Laws or Policies – Regulatory guidelines and tax treatment

Endowment policies in India are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). Key legal and tax-related highlights include:

• Section 80C of the Income Tax Act: Premiums up to ₹1.5 lakh annually qualify for deductions.

• Section 10(10D): Maturity or death benefit is tax-exempt if the premium is not more than 10% of the sum assured.

• Free-look period: Buyers can cancel within 15 to 30 days from receipt of policy documents.

• Policy lapse and revival norms: IRDAI mandates a revival period of up to 5 years for lapsed policies.

These laws aim to protect consumer interests and encourage long-term savings through insurance.

Tools and Resources – Apps, calculators, and websites to assist

Here are some tools and resources to help you choose and manage an endowment policy:

Policy Comparison and Selection Tools:

• Policybazaar – Compare endowment plans from different insurers

• BankBazaar – Evaluate policy benefits and eligibility

• Coverfox – Online support and document assistance

Mobile Apps:

• LIC Customer App – For LIC endowment policies, premium tracking, loan status

• Turtlemint App – Helps track and renew policies with reminders

• HDFC Life App – View bonus details, pay premiums, and check policy statements

Calculators:

• Endowment Plan Maturity Calculator – Estimates the maturity value, including bonuses

• Premium Calculator – Helps you plan premium outflows based on sum assured and policy term

FAQs – Frequently asked questions about endowment policies

Q1. What is the difference between an endowment policy and a term policy?
A term plan offers pure life cover without returns if the policyholder survives. An endowment policy provides life cover and a maturity payout, even if the policyholder survives the term.

Q2. Can I take a loan against my endowment policy?
Yes, most traditional endowment plans offer the option of loans after a certain number of years, depending on policy value.

Q3. How are endowment policies taxed?
Premiums qualify for deductions under Section 80C, and the maturity proceeds are tax-free under Section 10(10D), subject to conditions.

Q4. Are endowment policies good for investment?
They are low-risk investments, ideal for individuals seeking insurance with guaranteed savings, though returns are modest compared to market-linked products.

Q5. Can I surrender my endowment policy early?
Yes, but surrendering before a certain lock-in period (usually 2–3 years) may result in no or low returns. It is advisable to check the surrender value before cancellation.

Final thoughts

An endowment policy is a solid financial product for individuals who prefer guaranteed returns along with life insurance coverage. It supports long-term financial discipline and is suitable for those who are risk-averse or have fixed life goals.

However, it's crucial to:

• Compare multiple plans

• Understand the terms, bonus structure, and payout timeline

• Use calculators to estimate maturity value

• Consider alternatives like ULIPs or PPF if you're looking for higher returns

With the right planning and insurer, an endowment policy can serve as a stable pillar of personal financial security.