How Can You Customise Your Endowment Plan?

Fulfilling the dual need for protection and savings, Endowment Plans have established themselves as a good choice for life insurance. If you have significant goals, like starting a business or giving your child the best higher education- an Endowment Plan, also known as a Guaranteed Plan, has got you covered. Or if you just want to ensure financial stability, and live a safer life - it will help you out.

However, insurance as a product is something largely personal, and the degree of it varies across people and their needs. There is no ‘one-size-fits-all’ product, but it’s dependent on the stages and circumstances that we are in life. This is why customisation is important. It allows more personal choice, freedom, and flexibility. If you get to pick and personalise the features, the policy becomes more meaningful and truly your own.

So can you personalise your Endowment Plan? Let’s find out!
 

Customisations offered by an Endowment Plan

• Different Limited Pay Options
  In this option, you can decide to pay off the premiums early in life and enjoy the cover for the rest of the policy duration. You can choose a payment term as per your convenience - say, 10 years or 20 years - and finish paying your premiums within that term.
  This gives you the benefit of complete protection for the entire policy period, even when you are unable to pay the premiums in the later years.
  For example,
  35-year-old Sobhita buys an Endowment Plan for a period of 30 years. By the time Sobhita reaches 45, she wishes to pay off all her premiums, i.e., before she takes early retirement at 45. Hence, she can opt for the Limited Pay Option and pay all the premiums for her policy over the next 10 years - while being covered and invested for the entire policy period.

• Premium Payment Frequency
  You also get the option to customise how frequently you want to pay the premiums. Depending on your convenience, the premiums for an Endowment Plan can be paid -
  • Annually
  • Semi-annually
  • Quarterly
  • Monthly

Let’s take a look at Sahana and Rudrani’s example.

Sahana has been running a business for the last 25 years. And Rudrani is a salaried employee, who has newly started her career and has a loan to repay. They both purchase an Endowment Plan of Rs. 30 lakhs for a 15-year policy period.

Sahana’s business is running well and she will be able to shell out a large amount every year. Therefore, she goes for the annual premium payment option.

However, Rudrani opts for a monthly plan, as this way, it will be more comfortable for her to manage the premiums and other financial liabilities.

Please note: Irrespective of the payment frequency option you choose, always set up auto-debit or standing instructions on your bank account. It eliminates the need to remember due dates and ensures your premiums are paid on time - saving you from a policy lapse.

• Riders
  Riders are add-on benefits that can be added to your Endowment Plan by paying an additional yet reasonable premium. They are specifically designed to cover medical emergencies, like life-threatening illnesses, personal accidents, etc.
  To get a rider, you don’t have to go through any extra paperwork or medical tests. The ones you have already done for your base Endowment Plan suffice. Also, with riders, you get the benefits of many policies in one.
  Riders available with an Endowment Plan -
  • Accidental Disability Rider
  • Accidental Death Benefit Rider
  • Hospital Care Rider
  • Surgical Care Rider
  • Critical Illness Rider
  • Waiver of Premium on Critical Illness Rider
  • Waiver of Premium on Accidental Disability Rider

For example,
Varun purchases an Endowment Plan with a cover of Rs. 30 lakhs. Along with it, he buys an Accidental Death Benefit Rider with a cover of Rs. 3 lakhs. Due to an unfortunate road accident, he passes away even before he could be taken to the hospital. In this situation, his family will receive the Death Benefit of Rs. 30 lakhs and the Rider benefit of Rs. 3 lakhs - i.e, a total sum of Rs. 33 lakhs.

Please note: Riders available with an Endowment Plan will be different for different products.

• Joint Life Protection Option
  This option allows you to add your spouse under the same Endowment Plan. It helps you take care of your spouse’s needs and offer them protection.

  If you buy a plan with this option, you will be the primary life insured, and your spouse will be the secondary life insured. In case you pass away, the insurer will pay the death and maturity benefits to your spouse, if they are alive. Otherwise, your nominee will receive them. Here, the sum assured applicable to your spouse will generally be 20% of the sum assured applicable to you. However, the percentage may vary across products.

  Please note: You can choose the Joint Life Protection Option only at the time of purchasing the Endowment Plan.

Let’s understand this concept better - with the help of an example.

Malini buys an Endowment Plan with a sum assured of Rs. 60 lakhs. While buying the policy, she opts for Joint Life Protection and jointly owns the policy with her spouse, Vikram. As per the policy schedule, the sum assured applicable for Vikram will be 20% of the sum assured applicable for Malini. Therefore, a sum assured of Rs. 12 lakhs (20% of Rs. 60 lakhs) will be offered to Vikram.

Malini will be the primary life insured, and Vikram will be the secondary life insured. Now, let’s see how the death and maturity benefits will be paid out - if the primary or the secondary life insured passes away.

Situation #1
Primary life insured passes away before secondary life insured

In case Malini passes away before Vikram -

A death benefit of Rs. 60 lakhs will be paid to Vikram and he will become the sole owner of the policy.

He won’t have to pay any future premiums but will remain covered under the policy.

If Vikram survives the policy term, he will receive the maturity benefit.

If Vikram passes away within the policy term, the nominee will receive the death benefit of Rs. 12 Lakhs. And, when the policy matures, the nominee will get the maturity benefit and the policy will end.

Situation #2
Secondary life insured passes away before primary life insured

In case Vikram passes away before Malini -

A death benefit of Rs. 12 lakhs will be paid to Malini. Malini will become the sole owner of the policy.

She will have to continue paying the premiums, and will remain covered under the policy.

If Malini survives the policy term, she will receive the maturity benefit.

If Malini passes away within the policy term, the nominee will receive the death benefit of Rs. 60 lakhs. When the policy matures, the nominee will get the maturity benefit and the policy will end.

Situation #3
Both primary and secondary life insured pass away simultaneously

In case both Malini and Vikram pass away during the policy term simultaneously -

The death benefit of Rs. 60 lakhs as well as Rs. 12 lakhs will be paid to the nominee.

The insurer will waive off all the future premiums under the policy.

When the policy matures, the nominee will get the maturity benefit and the policy will end.

A good life insurance policy is the one that takes care of your specific needs and protects you without becoming a burden itself. By choosing how often and how long you want to pay the premiums, adding riders, or jointly owning the policy with your spouse, you can tailor your Endowment Plan to your own convenience. We hope you assess every aspect of the policy and make the most of your money and effort.