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What is Endowment Plan?

Endowment policy is a combination of saving and protection. The benefit are paid on survival of a specific period or on demise of policy holder within a term period.
Endowment policy = Pure Endowment + Term Assurance
Endowment policy are of 2 types Participating and Non-Participating

Participating Plan
Participating policy is also known as with-profit policy.The insurance company share the excess profit with policyholder known as bonus


Non-Participating Plan
Non-participating policy is also known as without profit policy. It doesnot distribute dividend nor it participate in distributuion of profit.


  1. Maturity Benefits: The insured receives sum assured plus bonus if any at time of maturity.
  2. Death Benefits: If death occur during the term policy the nominee is entitled to recieve sum assured plus bonus if any.
  3. Critical illness: Companies states that benefits are paid only if disease have occured 6 or 12 months of commencement of the policy. 
  4. Permanent disability: Permanent total disablement means that life assured is incapable to do any further act or occupation.The following are considered to constitute such disability:
    • irrecoverable loss of entire sight of both of the eyes
    • amputation of both hands
    • amputation of both feet
    • amputation of one hand and one foot
  5. Accidental death or dismemberment: In the event of accidental death during the policy period additional amount equal to sum assured is payable to the nominee.
  6. Bonus:A bonus is the method for distributing profit to policy holder. For participating policies, bonus is payable along with sum insured at time of maturity or death. For Non-Participating policy unbundled bonus is available  where investment, risk and administration components are seperate and premium in respect of different components can be clearly identified.
  7. Waiver of Premium rider:A clause in an insurance policy that waives the policyholder's obligation to pay any further premiums if he or she has become seriously ill or disabled. This is a benefit insurance company provide to policy holder if they cannot work.

Claims Procedure :-

  1. Death claim:
    • Claim form duly completed and signed by (a) Nominee (b) Assignee (c) Legal heirs.
    • Last medical Attendant’s statement on prescribed format duly completed, signed and stamped should be obtained.
    • Hospital Certificate, to be filled by the Hospital authority where the deceased availed medical treatment.
    • Statement to be filled up by third person who had attended the burial of the Assured.
    • Advance Discharge Voucher, it is to be Filled / completed by the claimant.
  2. Maturity Claim:
    • Policy holder need to sign the voucher form and submit to the insurance company one month before the policy period.
    • Submit all necessary documents required along with voucher form.

Exclusion

  • If the insured commits sucide within 12 months of start of policy or reinstament of policy the nominee cannot claim the sum assured. Only the premium paid uptill the date of death will be refunded.
  • If the insured misrepresent the health facts or age.
  • If the insured dies while participating in any criminal activities.

Taxation

The premium paid by an individual can qualify the deduction u/s 80C and maturity benefits are exempt from tax u/s 10(10)D of IT act.

 How can I revive my policy?
The policy get lapes if not paid within the due date or within the grace period permitted by the insurance company. Lapsation policy varies from company to company:-

  • Ordinary revival scheme: Under this scheme, all the unpaid premium along with interest have to be paid. You even require  proof for good health and medical certificate if necessary.
  • Special revival scheme: If a person is not in a position to pay all the arrears, then, he can choose this scheme. Under this scheme, the date of commencement will be shifted so that the policy is not lapsed just prior to the date of revival, i.e, the date of commencement is advanced approximately by the period of lapse. Other requirements like’
  • Revival by installment method: Proof for good health and medical certificate is required under this scheme. On date of revival he has to pay immediately
  • Loan-cum-revival scheme: If a policy acquires surrender value on the date of revival, the policy can be revived taking a policy loan. Loan amount will be calculated treating the premiums as paid upto the date of revival. Short fall, if any, in revival amount is called for. If loan amount is more than required for revival, the excess will be paid to the policyholder.
  • Survival benefit-cum-revival scheme: The Survival Benefit which falls due in a money-back type of policy can be used for revival of the policy, if date of revival is later than the Survival Benefit due date. Here, if the SB amount is less than the revival amount, the short fall will be called for. If the SB is more than the revival amount, the excess is paid back to the policyholder. The other requirements for normal SB settlement and revival requirement are to be fulfilled.

What is the benefit of option rider?
Riders are additional benefit which can be added to basic policy by paying additional premium. Common rider generally offered by insurance company under endowment policy are:-
Term Rider:

  • Critical illness rider
  • Accidental death and dismemberment rider
  • Partial or permanent disability
  • Waiver of premium rider.

 

 

 
 
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