The endowment policy is similar to term insurance, but the only difference is that an Endowment policy offers lump sum amount to the policyholder in case the life assured outlives the period of the policy. In case the life assured dies before the end of the term of the policy, the insurance company provides a death benefit to the nominee of the deceased person.
This policy also provides a combined benefit of savings and insurance coverage. It enables the insured to regularly save over a particular time frame to avail lump-some amount at the time of maturity. The maturity amount is paid to the insured if it survives the entire tenure of the policy.
The benefits of an endowment policy are:
Provides the dual benefit of saving and insurance coverage
Online purchase and renewal facility
Premium paid for term insurance is eligible for tax exemption under Section 80C and Section 10(10D) of the Income Tax Act
The policyholder may opt for different riders to enhance the coverage of the policy
Some policies may also provide an additional bonus facility, as a terminal bonus or reversionary bonus