Endowment Plan is a type of life insurance policy that provides both insurance coverage and savings. It pays a lump sum amount either on maturity or on the policyholder’s death, whichever occurs first. The policyholder pays premiums regularly for a fixed tenure, and at the end of the tenure, they receive the maturity benefit if they survive. If the policyholder dies during the policy term, the nominee receives the death benefit.
Benefits of Endowment Plans Life Insurance
- Dual Benefit: Provides life cover plus a savings component.
- Guaranteed Maturity Benefit: You get a lump sum on survival till the end of the term.
- Death Benefit: Provides financial protection to your family in case of your demise.
- Disciplined Savings: Regular premium payments inculcate savings habits.
- Loan Facility: Some policies offer loans against the policy.
- Tax Benefits: Premiums paid and maturity proceeds often qualify for tax benefits under Indian tax laws (e.g., Section 80C and 10(10D)).
- Bonus/Profit Sharing: Participating plans may declare bonuses which add to maturity benefit.
Risks of Endowment Plans Life Insurance
- Lower Returns: Compared to pure investment products or mutual funds, endowment plans offer relatively lower returns.
- Inflation Risk: Returns may not always keep pace with inflation.
- Less Flexibility: Premiums and tenure are fixed; less flexibility to modify during the policy term.
- Surrender Charges: If you exit early, you may face penalties or lose benefits.
- Complexity: Understanding bonus declarations and exact maturity amounts can be complex.
- Long Lock-in Period: Typically a long commitment (10+ years) which limits liquidity.
Top 10 Endowment Life Insurance Plans in India (2025)
| No. | Plan Name | Insurer | Key Features |
|---|---|---|---|
| 1 | LIC New Endowment Plan | LIC | Guaranteed returns, bonuses, low premium |
| 2 | HDFC Life Click 2 Wealth | HDFC Life | Online plan, wealth creation, flexible premiums |
| 3 | ICICI Prudential Endowment Plan | ICICI Prudential | Savings + protection, loyalty additions |
| 4 | SBI Life Smart Bachat | SBI Life | Savings with life cover, maturity benefits |
| 5 | Max Life Endowment Plan | Max Life | High sum assured, bonuses |
| 6 | Bajaj Allianz Smart Gain | Bajaj Allianz | Regular premiums, maturity benefits |
| 7 | TATA AIA Life Insurance Sampoorna Raksha | TATA AIA | Dual benefits, loyalty additions |
| 8 | PNB MetLife Endowment Plan | PNB MetLife | Death + maturity benefit, flexible tenure |
| 9 | Bharti AXA Life Endowment Plan | Bharti AXA | Savings with insurance, guaranteed payouts |
| 10 | Aditya Birla Sun Life Endowment Plan | Aditya Birla Sun Life | Bonuses, flexible premium payment |
Comparison of Top Endowment Plans in India
| Plan Name | Pros | Cons |
|---|---|---|
| LIC New Endowment Plan | Trusted brand, guaranteed bonuses, simple | Lower returns, less flexibility |
| HDFC Life Click 2 Wealth | Online convenience, wealth creation focus | Premiums higher, returns linked to fund performance |
| ICICI Prudential Endowment | Loyalty additions, strong brand | Moderate returns, may have surrender charges |
| SBI Life Smart Bachat | Affordable premiums, tax benefits | Bonus not guaranteed, long lock-in |
| Max Life Endowment Plan | High sum assured, bonuses | Premiums can be high |
| Bajaj Allianz Smart Gain | Flexible tenure, loan against policy | Limited bonus potential |
| TATA AIA Sampoorna Raksha | Loyalty additions, death + maturity benefit | Premium payment inflexibility |
| PNB MetLife Endowment Plan | Flexible tenure, competitive returns | Lesser brand recognition compared to LIC, ICICI |
| Bharti AXA Endowment Plan | Guaranteed payouts, easy claim process | Lower market presence |
| Aditya Birla Sun Life Endowment | Good bonuses, flexible premium | Slightly expensive premiums |
FAQ for Endowment Plans Life Insurance
Q1: What happens if I miss a premium payment?
A: Policies usually have a grace period to pay missed premiums. Beyond that, the policy may lapse.
Q2: Can I surrender my endowment policy early?
A: Yes, but surrender value may be less than premiums paid, especially in early years.
Q3: Are bonuses guaranteed in endowment plans?
A: No, bonuses are declared by the insurer based on profits and are not guaranteed.
Q4: What tax benefits are available?
A: Premiums paid qualify for deduction under Section 80C; maturity proceeds are usually tax-exempt under Section 10(10D), subject to conditions.
Q5: Can I take a loan against my endowment policy?
A: Yes, most plans allow loans against the surrender value after a certain lock-in period.
Q6: How is the maturity benefit calculated?
A: It includes the sum assured plus any bonuses declared during the policy term.
Q7: Are endowment plans suitable for retirement planning?
A: Yes, due to the lump sum maturity benefit and safety, they can be part of retirement savings.
Q8: How is death benefit different from maturity benefit?
A: Death benefit is paid if the policyholder dies during the term; maturity benefit is paid if the policyholder survives till the end.