Ignoring the importance of a life insurance plan in today’s day and age can mean throwing caution to the wind. Hence, buying life insurance is one of the first few things to do when planning your finances. Life insurance plans are policies essentially designed to provide protection for your dependents. However, many buyers also want the option to grow their money in this process. For such people, an endowment life insurance policy is an ideal choice. Let’s understand the endowment policyfirst.
Endowment plan – Explained
An endowment life insurance policy is a plan where the insurance company offers dual benefits, savings along with life insurance coverage under the same plan. This way, you can avail protection for your dependents while saving some money in this process.
The savings in an endowment plan are paid at the end of the policy term if the policyholder survives the tenure of the plan. Thus, unlike a pure life insurance cover (term insurance plan), an endowment policy offers survival benefits that can be used to meet your long-term financial goals. This lumpsum payment can be used to fund your child’s education, buy a house or simply create a retirement corpus.
Benefits of Buying an Endowment Policy
An endowment plan has the following four benefits that can be used to your best interest.
- Survival benefit
The primary benefit of an insurance policy is that it provides protection for your life. Your dependents are covered with a financial safety-net in your absence. An endowment policy, along with protection for life, offers survival benefit where the insurance company pays an assured sum on maturity of the policy if the policyholder outlives the tenure of the plan.
- Investment at a low risk
As compared to other investment alternatives that have market-linked returns like Unit Linked Insurance Plans or ULIPs, endowment policies have returns that are comparatively available at a lower risk.
- Long-term savings opportunities
If you are someone who wishes to save money for a rainy day, an endowment policy is what you should be buying. Along with a life cover, an endowment plan also encourages saving money which can then be used to meet financial goals.
Claim Settlement Process in Endowment Insurance Plans
The formal request by the policyholder or the nominees to extend compensation for the insured event is known as an insurance claim. Every insurance company has a procedure that is laid down to ensure a smooth claim settlement. Here are the steps how the claim settlement process works-
- Raising the claim
The very first step in raising a claim in your endowment policyis to intimate the insurance company. Whatever be the reason for the claim, it is important that the insurer is kept abreast. Moreover, some insurance companies specify a certain way, for instance, a written request, to raise a claim. However, new age insurance companies also accept online insurance claim applications.
- Scrutinising the claim report
Once the claim is received by the insurance company in its specified format, the insurer will begin the process of investigation. This verification is carried out to eliminate any chances of foul play by the policyholder or their nominees. At times, this process may go on for a period of six months from lodging the claim. The nominees of the policyholder are also asked to produce relevant documents and are notified in the case of any inconsistencies.
- Settlement of the claim
Once all relevant and satisfactory documents are received by the insurance company along with any clarifications that are deemed fit, the insurance company within 30 days pays the policy’s sum assured. The payment methods differ from insurance companies but generally, a bank instrument is preferred. In the event of death of the policyholder, a proof of death from the municipal authorities is required along with any other examination considered necessary by the insurer.
In the event of a premature death of the policyholder, the claim procedure varies slightly. First, premature death is a situation where the policyholder passes away within two years of the policy purchase or from its last revival. In such a tricky situation, the nominees are required to present the medical documents of the policyholder proving that there was no concealment of a pre-existing disease that existed at the time of policy purchase. This ensures that there is no reason for rejection of a valid claim application by the nominees.
There are several endowment plans to choose from and selecting one can often be a confusing choice. Depending on your financial goals and requirements, a life insurance calculator can be useful to choose an appropriate plan. Moreover, a life insurance calculator can be used to compare the different policies based on premiums and coverage that is available which is an essential factor at the time of buying a plan. Before finalising on any policy, make sure to understand the claim process as it can help avoid any last-minute hassles during a claim.