1800-270-7000
Aditya Birla Sun Life Insurance Company Limited
Aditya Birla Sun Life Insurance Company Limited
Types Of Endowment Life Insurance Plans
Endowment life insurance plans come in various types to cater to different financial needs and preferences. Here's a brief overview
Traditional Endowment Plans
These are the simplest form, offering a guaranteed# sum assured plus potential bonuses. They are low-risk and provide stable returns, making them suitable for conservative investors.
Unit-Linked Endowment Plans
These plans combine life insurance with investment in equity and debt funds. The returns depend on market performance, making them ideal for those who are willing to take on more risk for potentially higher returns.
With-Profit And Without-Profit Plans
'With-profit' plans offer bonuses based on the insurer's performance, while 'without-profit' plans do not. The choice depends on whether you want potential additional returns or prefer a straightforward sum assured.
Full Endowment And Low-Cost Endowment
Full endowment plans aim to provide a sum assured that's equal to or greater than the death benefit at maturity, while low-cost endowments are typically used for mortgage repayment and offer lower premiums.
ABSLI Vision LifeIncome Plus Plan
Lifetime of regular income
Flexible Bonus payouts
Life Cover till 100 years of age
Choice of 3 benefit options
Riders benefit option
Give:
1 lakh/year for 10 yearsGet:
Rs 3.71 lakhs @ 4% and Rs. 25.35 lakhs @ 8% at maturity⁵
ABSLI Akshaya Plan
Whole Life Insurance with Cash Bonus #.
Flexible Bonus Payouts
Two options for benefit payouts
Life Cover
Tax Benefits*
Give:
₹1 lakh for 6 yearsGet:
₹14.48 lacs¹Benefits Of An Endowment Policy
Dual Advantage
They provide life cover and act as a savings instrument. This dual benefit means financial protection for your family and a lump sum payout at maturity for your financial goals.
Disciplined Saving
Regular premium payments encourage disciplined saving habits, essential for long-term financial planning.
Financial Security
In the event of the policyholder's untimely demise, the family receives financial support, ensuring their lifestyle is not disrupted.
Maturity Benefits
The sum assured plus any bonuses on maturity can fund major life goals like education, a home, or retirement.
Tax Benefits*
Premiums paid and benefits received are usually eligible for tax benefits* under prevailing tax laws, adding to their attractiveness as a financial tool.
Flexibility
Many plans offer add-ons or riders for additional protection like critical illness cover, accident cover, etc., making them customizable to individual needs.
Salient Features Of An Endowment Policy
Maturity Benefit
One of the hallmark features is the maturity benefit, a lump sum payment received at the end of the policy term, provided the policyholder survives the term.
Death Benefit
In case of the policyholder's demise during the term, the nominee receives a death benefit, ensuring financial support for the family.
Policy Term
The duration of these policies is flexible, typically ranging from 10 to 30 years, allowing policyholders to align the term with their long-term financial goals.
Premium Payment Options
Endowment plans offer various premium payment options, including regular pay, single pay, or limited pay, catering to different financial situations.
Bonuses
Participating endowment policies may earn bonuses based on the insurer's performance, adding to the policy's value.
Loan Facility
Many endowment policies allow you to borrow against the policy, providing financial flexibility in times of need.
Riders/Add-ons
Additional coverage options like critical illness riders, accidental death benefits, etc., can be added for more comprehensive protection.
Why Should You Buy An Endowment Policy?
Financial Security For Family
It ensures that your family's financial needs are taken care of in your absence, providing peace of mind.
Goal-Based Saving
The lump sum received at maturity can be aligned with specific financial goals like funding education, buying property, or securing a comfortable retirement.
Forced Savings Discipline
Regular premium payments instil a habit of disciplined saving, which is crucial for long-term wealth accumulation.
Stable Returns With Low Risk
Endowment policies are ideal for those who prefer a stable and relatively low-risk savings instrument compared to direct market-linked investments.
Tax Benefits**
The premiums paid and the benefits received (both death and maturity) usually offer tax benefits** under prevailing tax laws.
Flexibility And Customization
The variety of plans available and the option to add riders mean you can tailor the policy to your specific needs and life circumstances.
Things To Consider Before Buying An Endowment Policy
Financial Goals
Understand your long-term financial objectives. Endowment policies are best suited for goals that are 10 or more years away.
Risk Appetite
Assess your risk tolerance. Endowment policies are generally low-risk, but if you're looking for higher returns, you might want to consider other options.
Policy Terms And Conditions
Read the fine print. Understand the terms regarding the maturity benefit, death benefit, surrender value, and policy loans.
Premium Affordability
Ensure that the premium fits comfortably within your budget. Remember, defaulting on premiums can lead to a policy lapse.
Inflation
Consider the impact of inflation on your future financial needs. Ensure that the sum assured is adequate to meet your future goals.
Riders/Add-Ons
Explore additional coverage options to enhance your policy. Riders with critical illness or disability can offer added protection.
Reputation Of Insurer
Choose a reliable insurer with a high claim settlement ratio, like ABSLI.
Tax Implications
Understand the tax benefits** and implications as per prevailing laws to make an informed decision.
What Are The Limitations Of Endowment Life Insurance Plans In India?
Lower Returns Compared to Market-Linked Investments
The returns on endowment plans are generally lower than those you could potentially achieve with direct equity or other market-linked investments.
Long-Term Commitment
These plans require a long-term financial commitment, which may not be suitable for those seeking short-term investment options.
Limited Liquidity
Endowment plans are not highly liquid. Early withdrawal or surrender of the policy can result in significant penalties and a lower surrender value.
Inflation Risk
The sum assured may not keep pace with inflation, potentially reducing the purchasing power of the maturity amount.
Complexity And Clauses
Some endowment policies come with complex features and clauses, which may be difficult for the average person to understand fully.
Cost
The cost of endowment plans, considering the premiums and policy charges, can be higher compared to term insurance plans.
What Are The Eligibility Criteria For Buying An Endowment Plan?
Age
Most endowment plans have a minimum entry age, often around 18 years, and a maximum entry age, which can vary but is typically around 60 years.
Income Level
While specific income criteria may vary, insurers generally require proof of a stable income to ensure the policyholder can afford the premium payments.
Financial Goals
Endowment plans are suitable for individuals with long-term financial goals, such as retirement planning, children's education, or accumulating wealth.
Risk Appetite
These plans are best suited for individuals with a low to moderate risk appetite, as they offer guaranteed# returns but with lower potential returns compared to high-risk investments.
Health Condition
Applicants may need to undergo a medical examination, and their current health condition can affect eligibility and premium rates.
Policy Term Preference
Applicants should have a clear idea of the policy term they are comfortable with, as endowment plans usually require a long-term commitment.
Premium Payment Capability
Prospective policyholders should have the financial capability to pay premiums regularly over the policy term without financial strain.
Tax Status
Individuals should also consider their tax status, as endowment plans offer tax benefits* which can be an important eligibility consideration for many.
What Are The Documents Required For Buying An Endowment Plan?
When applying for an endowment plan, you'll need to provide certain documents for identity verification, financial assessment, and underwriting purposes. Commonly required documents include:
Identity Proof
A valid government-issued ID like a Passport, Aadhar Card, PAN Card, or Driving License
Address Proof
Recent utility bills, Passport, Aadhar Card, or any other government-issued document that verifies your address.
Age Proof
Birth certificate, Passport, PAN Card, or any valid document confirming your age.
Income Proof
Recent salary slips, Income Tax Returns, or Form 16, to verify your financial capacity to pay the premiums.
Photographs
Recent passport-sized photographs.
Medical Reports
If required, based on age and sum assured, medical examination reports.
Application Form
A duly filled and signed policy application form.
Other Documents
Any other documents as specified by the insurance provider, which could include bank statements, employment details, etc.
What Is The Complete Endowment Plan Claim Process?
The claim process for an endowment plan typically involves the following steps
Claim Intimation
Notify us about the claim immediately after the occurrence of the event (death of the policyholder or policy maturity).
Document Submission
Submit all required documents, including the claim form, policy document, death certificate (in case of death), identity proof of the beneficiary, and any other documents requested by the ABSLI.
Claim Processing
We will assess the claim, which may involve verification of documents and, in the case of death claims, possibly an investigation if the policy is relatively new.
Decision
Once the verification is complete and the claim is found valid, we will approve the claim.
Payout
We will disburse the claim amount either as a lump sum or as per the payout method chosen at the inception of the policy.
Dispute Resolution
In case of any disputes or if the claim is rejected, the nominee has the right to appeal or approach a grievance redressal cell.
What Happens When An Endowment Policy Matures?
When an endowment policy reaches its maturity date, several things happen
Maturity Notification
We will notify you about the upcoming maturity of your policy.
Document Submission
You may need to submit certain documents, such as the original policy document, identity proof, and a maturity claim form. We may also require a bank mandate form for direct transfer of the maturity amount.
Maturity Benefit Payout
Once all necessary formalities are completed and documents verified, we will pay out the maturity benefit. This amount typically includes the sum assured along with any accumulated bonuses or profits, as specified in the policy terms.
Policy Closure
After the maturity amount is paid, the policy is closed. There will be no further benefits payable under the policy, and it ceases to provide coverage.
Option For Reinvestment Or Annuities
Some policies may offer options to reinvest the maturity amount into another policy or convert it into an annuity for regular income. This is optional and depends on your financial goals.
Are Endowment Plans Tax-Free?
The tax treatment of endowment plans in India is subject to the prevailing tax laws, which can change over time. As of the latest information available
Tax Benefits* On Premiums Paid
Premiums paid towards an endowment policy are generally eligible for tax deduction under Section 80C of the Income Tax Act, subject to certain conditions.
Taxation Of Maturity Proceeds
The maturity proceeds from an endowment policy are tax-free under Section 10(10D)** of the Income Tax Act, provided the premium paid does not exceed 10% of the sum assured for policies issued after April 1, 2012. For policies issued prior to this date, the premium must not exceed 20% of the sum assured.
Exceptions
There are certain exceptions to these rules, such as policies for persons with disabilities or specified diseases where the premium threshold is different.
Death Benefit
The death benefit received from an endowment policy is usually tax-free irrespective of the amount.
Looking For Assistance?
Need help with your existing policy? Call us on our toll-free no. for quick response!
1800 270 7000FAQs
That depends on the policy. Some need regular premiums throughout the term, while others offer limited pay options.
If you're looking for guaranteed# savings along with insurance, an endowment plan can be a good fit - especially for conservative investors.
Yes, many endowment plans let you take a loan after a certain period, which can help during emergencies.
Yes, in most cases, the maturity amount is tax-free under Section 10(10D), if conditions are met.
It offers dual benefits of life cover plus savings. It helps you plan for big goals like your child’s education or a home down payment.
You pay premiums for a set number of years. At the end, you either get a maturity payout or your nominee gets the amount in case of your unfortunate death.
An endowment plan is a life insurance policy that gives you a lump sum after a fixed period or to your family if something happens to you during the term.
* Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details
**Sec 10(10D) benefit is available subject to fulfilment of conditions specified therein
#Guaranteed all due premiums are paid.
For further details regarding the above-mentioned rider, please refer to the respective rider prospectus available on our website.
² ABSLI Vision Life Income Plan, healthy male, age 21, Sum Assured Rs.10 lakhs. Annualised Premium of Rs.1.62 lakhs approx for premium payment term: 8 years, policy term: 79 years, lump sum benefit of Rs.12000 @4% or Rs.3.44 lakhs @8% in 8th policy year, guaranteed regular income of Rs.50,000 plus bonus for life from 9th year.
⁴ ABSLI Vision Endowment Plus Plan, age 21 years, sum assured Rs.200000, premium paying term 7 years- annual, policy terms 10 years, Death benefit option:Option A, annual premium Rs.31,502/- for 7 years, Total total maturity benefit including terminal bonus, if any of Rs.2,39,514/- @4% and Rs. 3,07,514 @8% after 10 years for long term financial needs.
5Mr. Sharma, aged 35 years, invests in ABSLI Vision LifeIncome Plus Plan and chooses the following at inception:
Benefit Option: ‘Long Term Income’ , Annualized Premium: Rs. 100,000 p.a. , Premium Payment Term: 10 years, Benefit Payout Period: 20 years, Policy Term: 30 years, Benefit Payout Frequency: Annual, Sum Assured: Rs. 6,45,270, Bonus Utilization Option: Paid Up Additions. Mr. Sharma survives through the Policy Term and receives Guaranteed Income Benefit throughout the Benefit Payout Period. He receives Lumpsum of Rs.3,71,029 @4% and Rs. 25,35,903 @8% at maturity.
ABSLI Akshaya plan is a non-linked participating individual savings life insurance plan (UIN: 109N136V04)
ABSLI Vision LifeIncome Plan is a traditional participating endowment plan UIN: 109N079V07
ABSLI Vision LifeIncome Plus Plan is a a Non-Linked Participating Individual Life Insurance Savings Plan (UIN: 109N131V02)
ABSLI Vision Endowment Plus Plan is a traditional participating endowment plan (UIN: 109N092V06).
All terms & conditions are guaranteed throughout the policy term, except for the bonuses which would be declared at the end of each financial year. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc.
ADV/4/25-26/41
