Are you thinking of investing in an endowment policyIt is definitely worth considering for your investment portfolio. What makes it a good bet? For starters, you get a great mix of future savings opportunities and life insurance coverage. Also, there are no worries related to market risks, since the returns are absolutely guaranteed. And that's not all; there are fabulous tax benefits on offer for investors under these plans as well. Let us take a look at them below.
Endowment Policy Tax Benefits to Expect
If you're investing in an endowment policythen there are two distinct tax benefits that you can expect from the same. They include the following:
● Section 80C Deductions- An endowment policy will help you get handsome deductions on the premiums that you pay. Section 80C offers these deductions up to Rs. 1.5 lakh and you can naturally gain some savings down the line. It is one of the key tax benefits that investors look for when purchasing these policies.
● Section 10 (10D) Deductions- Another component of the endowment policy is a savings or wealth creation plan. Thus, there is an assured maturity benefit that you get at the conclusion of the policy term. This will be exempted from taxation as per the guidelines of Section 10 (10D). If your nominee receives it on account of your demise, then the same section comes into play for the exemptions as well. There are some conditions under the section that should be met in order to get this exemption.
Major Advantages of Endowment Policies
An endowment policy also offers diverse benefits to policyholders aside from tax benefits. Some of them include:
● There is sizeable life coverage throughout the policy tenure, making sure that your family members are financially secured in case of your sudden demise.
● You will always get a maturity benefit if you survive the policy term and this may be used to cover various costs. Some examples include home purchases, the higher education of children, retirement planning, etc. You get guaranteed returns with these plans, thereby ensuring a lump sum at the conclusion of the tenure.
● There is no need to separately opt for insurance and investment in your portfolio. These policies help you combine both into one effective plan, especially for those who are riskaverse and want to avoid market fluctuations.
● You can easily foreclose the policy if you need funds urgently. The bonuses, interest, and sum will be given to you accordingly. An endowment policy Has high liquidity levels.
● The returns can be compounded over the policy tenure, helping you get massive returns over the long haul.
● You may beef up your plan with several riders or addons which include accidental disabilitydeath, terminal illnesses, premium waiver, and more. This will help you widen your coverage scope considerably.
An endowment policy is an excellent addition to almost any portfolio, offering a financial safety net for your loved ones and an opportunity to build savings for the future. The negligible risk quotient of these plans is another plus point worth noting in this regard.
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