Endowment Policies: A Secure Way to Save and Grow Your Hard-Earned Money

Did you know the average savings account interest rate is less than 4%? In such a scenario, you may be tempted to up your risk tolerance to get more returns. Endowment policies can be a handy low-risk solution to this. Endowment plans and bonuses have historically been shown to give more than savings account returns. This makes them a compelling investment option for your hard-earned money.

 Simply put, endowment policies provide life insurance coverage and also help you save for the uncertain future. The twin benefits of financial protection and long-term savings offer a good combo for investors. Let us have a detailed look.

What Are Endowment Policies

 As investment products, endowment policies give you insurance coverage and investment returns. A portion of your premium goes for insurance coverage, similar to term insurance. The majority balance premium of an endowment policy goes into investments. In India, endowment policies over the policy term offer a guaranteed sum assured (insurance component) along with bonuses or returns (investment component).

 Historically, the performance of underlying investments of endowment policies averaged between 4% to 7% per year. This should give you a broad idea of endowment policy returns.

 There are different types of endowment policies available. This list includes traditional endowment plans, Unit linked endowment plans, and with-profit endowment plans. Each type offers unique features such as flexibility in premium payments, options to receive bonuses etc.