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Endowment Cover refers to a nature of Insurance Policy that combines some of the requisites of life insurance and saving schemes with maturity benefits. Such an Insurance plan helps secure the future of a person’s loved ones, alongside providing a great degree of benefits for oneself as well.
What is Endowment Cover?
In regard with the functionality, Endowment Cover is a fairly uncomplicated scheme. It bears great resemblance to the provisions of a Life Insurance policy. Therefore, it entails, that if a policy holder dies during the term of the policy, a pre-decided amount of lump sum money is given to the state beneficiary.
This money may be used to cover funerary costs, unpaid bills, mortgage or debts as required. The deviation from the regular Life Insurance Policy is such that in case the policyholder lives through the term of the Insurance plan, they are entitled to certain maturity benefits. In fact, they will get the entire sum of accumulated premiums along with other bonuses in the form of survival benefits.
The terms and conditions of such Endowment Cover Schemes vary greatly. The term for such Insurance schemes varies, as do the specific details of maturity benefits. While the death claim is a tax-free amount, in case of survival, the maturity lump sum amount may be liable to be levied with tax. Different plans from different Insurance agencies offer various bonuses on the plausible maturity benefits. As can be expected, Endowment Cover Plans are priced higher than the regular Life Insurance Policy Schemes.
Alternatives to Endowment Cover
There is no single possibly alternative to Endowment Insurance. However, a Life Insurance Policy comes close. It provides the stated beneficiaries with a given amount at the demise of a policyholder. However, there are no maturity benefits associated with the term of the policy plan.
Main Benefit of Endowment Cover
The key advantage of this plan is that it provides a nature of dual-service. It gives insurance cover to one’s loved ones in the occurrence of a sudden demise. At the same time, it functions as a saving scheme as it provides survival benefits, if the policyholder lives through the term of the policy.
Main Drawback of Endowment Cover
The only disadvantage of an Endowment Cover Policy is that it is higher priced than the regular Life Insurance Plan. However, given the additional benefits it entails, the elevated prices are far from being unreasonable or overly expensive.
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