Endowment plan is a life insurance policy that offers a combination of insurance cover along with savings plan. It helps in regular savings over a specific period of time, so that you are able to get a lump sum amount at the time of policy maturity.

As part of an endowment plan, the policyholder gets his/her sum assured on a fixed date in future as per the policy terms and conditions. However, in case of the sudden death of the policyholder, the insurance company will pay the sum assured (plus the bonus, if any) to the nominee of the policy. An endowment plan is also useful to secure yourself or your family post-retirement or to meet various financial needs including children's education and/or marriage or purchasing a house.

Why Endowment Plans?

The decision to buy an endowment plan must be well thought through after considering its benefits, returns on investment, etc. and comparing them against those of similar investments.

For a healthy individual in need of life insurance cover and investment that helps in saving on tax in addition to giving huge returns, he or she may choose to opt for a combination of financial products or opt for a single endowment plan which offers the same.

An endowment policy is much less risky than a mutual fund investment, and also has ULIP options which invest in various equity and debt schemes. In addition to being a tax-saving investment with guaranteed returns at the end of the term, it also provides comprehensive life insurance cover – which is a win-win situation for the investor (and his dependents).

Investors often argue against endowment plans because the returns on investment are not as high as those offered by a mutual fund, equity and debt-related investments of similar amounts for similar tenures. Purchasing two separate financial products – one for a life insurance policy and one for a product directed to give returns on investment will pay off better with a higher percentage of returns. 

It must be noted that while there are better options for returns on investments, endowment policies are first and foremost insurance policies. They just have the added benefit of giving returns on the premium invested – upon plan maturity.

Types of Endowment Plans

The three main types of endowment plans include:

  • Unit Linked Endowment - Under this plan, the insurance premiums are directed into multiple units held under a specific investment fund. The investment fund can be chosen by the policyholders.

  • Full Endowment – Under this scheme, the minimum amount ensured is equal to the death benefit and is calculated from the start of the policy. Depending on the speculated market-based appreciation, the final pay-out provided could be relatively higher.

  • Low-Cost Endowment – This endowment plan comes with the intention of allowing individuals to accumulate the funds which have to be paid after a specified time period, generally mortgage.


Key Features and Benefits of Endowment Plans

Some of the key features of endowment plans include:

  1. Endowment policies usually come ‘With Profit’ and also ‘Without Profit’, depending on the requirements of the investor.

  2. Under Endowment plans, the bonus for full-term is payable on the date of maturity or in the event of death, whichever is earlier.

  3. Premiums for endowment policies can be limited to shorter-term or can be paid as a single premium.

  4. Sum assured is payable either on survival to the term or on death occurring within the term.

  5. Premiums cease on death or on expiry of the term, whichever is earlier.

Some of the main benefits of endowment plans include:

  1. Provides insurance cover during the policy term.

  2. Investors can get a sizeable lump sum amount at the end of the policy term i.e. once the policy has matured.

  3. An endowment policy works to serve a dual purpose. It acts as an insurance policy and also serves as a long-term investment offering decent returns.

  4. Endowment policies usually come with tax benefits.

  5. From an investment perspective, endowment policies are relatively safer as compared to other types of investments and offer returns which are close to those offered by mutual funds.

  6. Endowment policies enable long-term savings.

  7. Under endowment policies, investors can be assured of receiving a considerable amount upon maturity.

  8. Most will extend insurance coverage and the promise of benefits even after the maturity date, in some cases up to a time when the life insured attains the age of 100.

  9. Policyholders have the options of opting for additional riders which provide cover for specific illnesses, critical illnesses, disabilities, etc.

Ways to Choose an Endowment Plan

There are many endowment policies available in the market today. However, there are several factors an individual should consider while choosing the right endowment policy. Factors such as income, an individual’s needs, current life stage, and risk appetite should be considered while choosing an endowment policy.

The cost of the premium also plays an important role while choosing an endowment plan as the premium of endowment plans are costly as compared to other investment plans. Also, other factors to keep in mind would be the insurance provider’s track record in terms of the bonuses, customer service provided by the insurer, their claim settlement ratio, financial status of the insurer, etc.

An investor should buy an endowment policy which is simple and does not come with features and benefits which are difficult to comprehend.

Important Points to Note While Buying Endowment Plans

  • Advance Planning: Investments must always be well planned and in advance, as this allows for your investment to grow in the long horizon. This, in turn, will help the insured to build a corpus and facilitate disciplined saving.

  • Plan with Riders: There are many insurance companies which offer riders as an inbuilt feature and one must never miss out on it. Additional benefits would include benefits such as education endowment, double endowment policy or a marriage endowment policy.

  • Flexibility Option: Endowment plans provide flexible options. In case an individual is salaried, she/he can choose a regular endowment policy whereas an individual with irregular income may opt for a single payment option or limited premium payment option.

  • Guaranteed and Non-Guaranteed returns: Apart from offering low-risk insurance and dual benefit of death cover and saving feature, many of these policies also offer a combination of guaranteed and non-guaranteed. The guaranteed returns such as guaranteed additions remain fixed and are payable on death or maturity (as applicable). The non-guaranteed returns include bonuses that are variable in nature and it depends on the investment performance.

  • Bonuses: Bonuses are declared by the insurance company depending on how the company has performed. When the insurer has made profits from its investments, he distributes a part to it to policyholders at the end of each financial year. Besides, the profit of the insurance company depends on the valuation of its assets and liabilities.

Documents Required for Endowment Plans

Mentioned below are some of the common documents that are required to be furnished while enrolling in an endowment plan.

  • Fully filled Application form/Proposal form.

  • Photograph.

  • Proof of residence/address proof.

  • Proof of age.

  • Medical reports (only if required).

Top Endowment Plans in India

  1. HDFC Life Sampoorn Samridhi Plus

  • POLICY NAME - HDFC Life Sampoorn Samridhi Plus

  • ENTRY AGE - 30 days to 60 years

  • MATURITY AGE- 18 to 75 years

  • POLICY TERM - 15 to 40 years

  • PREMIUM PAYMENT OPTION - Limited Pay: monthly, quarterly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - Rs. 65,463

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - 5 years less than policy tenure


  1. LIC New Endowment Plan

  • POLICY NAME - LIC New Endowment policy

  • ENTRY AGE - 8-55 years

  • MATURITY AGE - up to 75 years

  • POLICY TERM - 12-35 years

  • PREMIUM PAYMENT OPTION - yearly, half-yearly, quarterly, monthly

  • SUM ASSURED (MINIMUM) - Rs. 1,00,000

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - Throughout the policy period


  1. Kotak Classic Endowment Policy

  • POLICY NAME - Kotak Classic Endowment Policy

  • ENTRY AGE - 0 to 55 years for Regular Pay 0 to 60 years for Limited Pay

  • MATURITY AGE - 18 to 75 years

  • POLICY TERM - 15 to 30 years

  • PREMIUM PAYMENT OPTION - Regular and Limited: monthly, quarterly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - It usually depends on the policy period and premium

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - Regular Pay throughout the policy duration for and as per the chosen period for Limited Pay


  1. PNB MetLife Endowment Savings Plan Plus

  • POLICY NAME - MetLife Endowment Savings Plan Plus

  • ENTRY AGE - 18 to 50 years for Regular Pay annual premium payment. 18 to 45 years for Regular Pay monthly/semi-annual premium payment. 18 to 55 years for Limited Pay annual premium payment. 18 to 50 years for Limited Pay monthly/semi-annual premium payment.

  • MATURITY AGE - 65 years for Regular Pay 80 years for Limited Pay

  • POLICY TERM - Regular Pay: 10 to 15 years Limited Pay: 10 to 25 years

  • PREMIUM PAYMENT OPTION - Regular and Limited: monthly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - Rs. 2,20,000

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - Regular or Limited Pay for 5 years, 7 years or 10 years


  1. Reliance Nippon Life Super Endowment Plan

  • POLICY NAME - Reliance Nippon Life Super Endowment Plan

  • ENTRY AGE - 8 to 60 years

  • MATURITY AGE - 22 to 75 years

  • POLICY TERM - 14 and 20 years

  • PREMIUM PAYMENT OPTION - Monthly, quarterly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - Rs. 1 lakh

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - Half of the policy term


  1. Bajaj Allianz Save Assure Plan

  • POLICY NAME - Bajaj Allianz Save Assure Plan

  • ENTRY AGE - 1 to 60 years

  • MATURITY AGE - 18 to 75 years

  • POLICY TERM - 15 or 17 years

  • PREMIUM PAYMENT OPTION - Monthly, quarterly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - Rs.1 lakh

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - 5 years less than the policy tenure


  1. SBI Life Smart Bachat

  • POLICY NAME - SBI Life Smart Bachat

  • ENTRY AGE - 8 to 50 years

  • MATURITY AGE - Up to 65 years

  • POLICY TERM - 10 to 25 years

  • PREMIUM PAYMENT OPTION - Monthly, quarterly, semi-annually or annually

  • SUM ASSURED (MINIMUM) - Rs. 1 lakh

  • SUM ASSURED (MAXIMUM) - Unlimited

  • PREMIUM PAYING TERM - 5 to 15 years


  1. Do endowment policies offer any tax benefit?

Yes, Sections 80C and the received benefits fall under Section 10(10D) allowing the policyholder to avail tax benefits.

  1.  Do I need a lot of documents to buy an endowment plan?

No, buying an endowment is a hassle-free process. You will require just a basic set of documents to enrol in one.

  1. Can I purchase an endowment policy online?

Yes, an endowment plan can be purchased online on the insurance company’s official website. If not on the official website, you can find them offline or on third-party websites.

  1. Can I surrender an endowment policy before completion of the policy term?

Yes, an endowment plan can be surrendered after the policy has acquired a surrender value which is usually 2 or 3 years depending upon the policy term and premium payment term. Once you surrender the policy, you will be eligible to receive the guaranteed surrender value or the special surrender value, based on whichever is the higher of the two.

  1. Can I buy an endowment plan for my child?

Yes, in this case, you are the policyholder and the child will get a lump sum in case of the policyholder's death.

End Note

Endowment plans cover the life insured for a specified period. It allows the investor the option to remain insured based on his or her requirements. These are like insurance policies but come with the combined benefit of insurance cover as well as savings. This is the primary reason why it attracts many investors.