The Role of an Endowment Policy in Estate Planning and Wealth Management


With an endowment policy, your family is financially protected in the event of your passing. A predetermined amount is paid to the policyholder at maturity if they live out the term of the plan. Typically, the premiums are small, periodic payments made over time.

Who should get an endowment policy?

For people who do not want to invest in conventional life insurance, endowment policies act as a saving mechanism. Should a terrible event occur, the endowment plan also shields your loved ones from financial uncertainty. With the endowment policy, your family is protected from all hazards and is spared from financial difficulty.


Modular premium payments: Depending on your financial capability, you can decide how often the premium payments will be made.

  • Versatility in a cover

You can add coverage for severe illnesses, incapacity, and unintentional death to the standard plan. This additional coverage is referred to as a rider.To add riders to your base plan, you will need to pay a fee in addition to your base premium.

  • A safe investment

Your safest investing option is an endowment policy. Your endowment insurance has a lesser risk than mutual funds and ULIPs because your money doesn’t go into equity funds or the stock market directly.

  • Maturity

After a certain period of time, when the policy has matured, the maturity benefit is offered to the policyholder. To a certain amount, the amount insured from the maturity benefit is tax-free.

  • Tax advantages

What could be better than an insurance policy that serves as a tool for savings and tax exemption? You may be eligible for a tax exemption on premium payments and maturity amounts up to a certain amount under Section 80C and Section 8010(10D).


The bonus is the extra cash the insurer gives the policyholder. Nevertheless, a bonus is only good for customers who buy profit-sharing insurance. Bonuses for the policyholder are only given out when the insurer has money left over after paying out for charges, expenses, and claims. 

The two types of bonuses are:

Contingent Bonus When a buyer of a with-profits policy reaches maturity or passes away, a reversionary bonus is provided.

Ending Bonus It is a bonus that the insurer offers to the policyholder upon maturity and pays from the profits it makes. The bonus may be paid by the insurer at the policy’s maturity or at the time of the policyholder’s death.


An accidental death rider can be purchased by the policyholder. According to the policy, the nominee will get the death benefit. In addition, the nominee will receive an amount guaranteed from the accidental death benefit.

 When a policyholder purchases a critical illness rider, they are provided with a lump sum payout upon the discovery of conditions like cancer, heart attack, kidney failure, etc.

A daily allowance is provided to the policyholder by the hospital cash benefit rider in the event of hospitalization. Additionally, the rider includes post-hospitalization costs

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