To live a life of financial well-being and security, one must have a financial portfolio in place. If you consult an expert about creating one, then there are several essential elements they will ask you to add in your list, regardless of your goals. Saving and life insurance coverage are to be found in any sound financial portfolio, and rightfully so. Life insurance helps you secure the future of your family if an untoward event occurs with you. Savings, on the other hand, help you meet your future goals by allowing you to keep aside a portion of your income now. What if both these aspects were available under a single product? An endowment plan is just that – an insurance product with the features of a savings plan. This article takes a look at the latest trends within endowment plans.
How do endowment plans work?
Before we get to the details, let us understand briefly how endowment insurance plans work. Like other life insurance products, an endowment plan, too, requires the payment of a regular premium. The insurer directs the premium for two uses – creating the life coverage amount and accumulating the savings corpus. The life coverage amount, as you may be aware, is provided to the beneficiaries of the family when the policyholder passes away. This amount can help the financial dependents of the policyholder deal with the sudden absence of a regular income in a dignified manner.
The savings corpus, on the other hand, provides the policyholder with the financial resources to meet their objectives and fulfil their dreams. Thus, your regular endowment premium carries out the tasks of two products – a life insurance policy and a savings plan.
As times change, the way people buy and look at life insurance plans also change.
Trends observed in the endowment insurance sector
- Increase in the number of people buying endowment plans
The recent pandemic has taught many that life can be quite unpredictable. The constant news of disease and demises made people aware that there is no saying when an unfortunate event will strike. Therefore, one should not only save for a rainy day but also secure their loved ones’ future in case they are no longer around. Concerns like these have led to an increase in the number of people buying endowment life insurance plans. Due to its added benefit of a savings plan, endowment insurance offers a risk-averse policy seeker the best of both worlds.
- Riders are becoming popular
At the cost of an additional premium, one can increase the coverage of their endowment insurance plan by opting for riders. Some popular rider options include critical illness rider, accidental permanent disability/ death rider, waiver of premium rider, and so on.
The pandemic has also taught people the importance of being financially prepared for health issues, especially ones that come unannounced. For instance, the diagnosis of a critical illness can cause an immense drain on your emotions as well as finances. Therefore, people are nowadays opting for add-ons that offer additional protection against such unforeseen scenarios. The critical illness rider, for instance, provides you with a lump-sum pay-out if any of the insured members are diagnosed with a covered critical illness. A life insurance calculator can estimate how much premium you may have to pay if you choose add-ons along with the base coverage.
- Online purchases are becoming more common
Digitisation has reached great heights in the past few years. The insurance industry, rather than being intimidated by digital procedures, has rather embraced it. Along with that, more and more people are now preferring to buy endowment plans online. The process to buy them is also quite easy. One can upload the soft copies of the required documents, do a video KYC if required, pay the premium via secure payment getaways, and get their policy issued within minutes.
Buying a policy online also gives you access to vital resources and tools such as the life insurance calculator in real time. These resources and tools help you make more well-informed decisions.
Another trend observed recently is that people are, in general, becoming more common about the importance of insurance. As the per capita income increases, a larger amount of people have the money to not just provide for their present but secure their future as well. Buying an endowment insurance policy is one of the best ways to achieve that.
Do read the policy wordings and resolve your doubts with the insurer before making any major financial purchase.