The most common type of plans available in the market with guaranteed returns are called Endowment Plans. This plan is actually called Endowment Assurance Plans. It is hence a combination of Pure Term Plan and Pure Endowment Plan. Pure Term plan has ONLY Death Benefit with no Maturity Benefit, whereas Pure Endowment Plans have ONLY Maturity Benefit with no Death Benefit. However, Endowment Assurance Plans have Death Benefit if the Life Assured dies within the policy term as well as Maturity Benefit if he survives till the policy matures. Hence it is a complete win-win situation for the policyholder.
In Endowment Plans, benefit paid either on death or maturity whichever occurs earlier. Thus if the Life Insured dies within the policy term, the nominee gets the Sum Assured as the Death Benefit and the policy terminates thereafter. However, if the Life Insured survives till the end, then he gets the Maturity Benefit as guaranteed at the policy inception.
There are many types of Endowment Plans. Money Back Plans or Anticipated Endowment Plans are also a variety of the same. There are Marriage Endowment Plans, Educational Endowment Plans, etc. Child Plans are also a type of Endowment Plans.
Endowment Assurance Plans are offered by companies with Profit i.e. the customer is given an option to participate in the profits of the company by paying a higher premium and would hence get bonus. This type of plans is called Participating Policies. This type of policies offer bonus to their customers. If policyholders do not opt to participate in the bonus, then it is called Non-Participating Policies.
You should compare endowment plans to find the best one for your family.
Who should buy Endowment Plans?
The usual customers for this plan would be someone who is the interested in both life cover as well as returns. It is also beneficial for someone who is a risk averse person and wants guaranteed return. It is good for someone who is yet to build up his personal portfolio like a person who has newly joined work. The returns are typically not very high as the investments are mostly in debt instruments which protect capital but offer low returns.
