5 Things to Expect When Purchasing an Endowment Plan

An endowment plan is a kind of life insurance policy that has both saving components and lump sum benefits. You need an endowment plan if you wish to have sufficient funds to cover for future life events, such as your child’s college education or buying your dream home. If you die before the policy matures, your beneficiaries will get the full sum.  Aside from these, here are other important things to know about endowment plans:

  1. The risk will depend on the returns

The higher the returns, the higher the risks. Similarly, if you avail a policy with the lowest return, expect it to be risk-free. Compared to saving in the bank, you will get higher returns with an endowment plan. Banks usually have 0.25% returns while insurance plans normally offer around 3-5% returns.

  1. You have different payment options

You can either pay on a one-time basis or regularly. Endowment plans vary from bank to bank. At OCBC Bank, for instance, they will let you choose between regular and one-time payment.

  1. You receive protection as a policyholder

Your plan comes with many benefits, including coverage for terminal illness, total permanent disability, and death. These benefits can be availed throughout the policy term.

  1. It requires a long-term commitment

If you terminate the policy, you will have to pay for the penalties. Remember to set a clear financial goal as soon as applying for an endowment insurance plan.

  1. You can apply for your child

The cost of tuition fee increases every year. But if you are determined to secure your child’s future, you can apply for an endowment plan under his name. Banks have varying requirements, but most of the time, banks will let you apply for your child who is as young as one month old.

As a policyholder, you have an option when you want the policy plan to mature. For example, you can choose to receive your maturity benefit ten years from now. By the time your endowment plan matures, you can already receive your benefits in a lump sum. Now that you already have an idea about endowment plans, the next best thing to do is to inquire in the nearest bank in your area.