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Unit Linked Insurance Products (ULIPs) have become the order of the day. A ULIP plan gives the policyholder a chance to participate in the stock market along with the much-needed insurance protection attached to the product. The sale of ULIPs have increased in the past few months as most of the investors choose to flow with the trend. Since its launch, ULIPs have been a favorite investment choice among investors. So far ULIPs have been in the limelight, now lets understand how an endowment policy is an excellent option for long-term savings.
Firstly, the premium amount outgo for a term or a whole life policy is quite low compared to an endowment policy. Infact, a term policy is the cheapest insurance policy available. Broadly speaking, a term insurance policy offers only pure risk cover. There are no maturity benefits given at the end of the term to the policyholder. However such is not the case with endowment policies that offers maturity returns. Hence the premium payment for these policies is much more compared to other policies. Also the premium increases as per the age and tenure selected by the policyholder.
Apart from this, the policyholder also gets to participate in the profits of the company along bonus that is announced by the Life Insurance Corporation of India (LIC). Thus an endowment policy is a smart and a safe investment option with a life insurance cover.
Some of the policies offered by LIC are Jeevan Saathi, Jeevan Chhaya, Jeevan Pramukh, etc. One of LIC's policies is explained below.
Jeevan Chhaya is an endowment assurance plan that provides financial protection against death throughout the term of the plan. On maturity, bonus on the full sum assured and final additional bonus if any is given along with the last 25% balance of sum assured. The policy also offers you the flexibility of payment, which can be done on a yearly, half-yearly, quarterly, monthly basis or through salary deductions.
It is a with-profits plan and participates in the profits of the Corporation's life insurance business. It gets a share of profits in the form of bonuses. Simple reversionary bonuses are declared per thousand sum assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses for full term on the full sum assured are paid at the end of the term even if death occurs during policy term. Final (Additional) bonus may also be payable provided policy has run for certain minimum period.
