Endowment policy

An endowment insurance plan is a savings oriented life insurance plan which helps in building up a secured financial corpus. The plan promises guaranteed benefits and pays either a death benefit or a maturity benefit.

Features of an endowment policy

There are some qualifying features of an endowment policy which are as follows:

  • The policy is usually offered for long tenures going up as high as 30 years. In some endowment plans, lifelong coverage might also be available.
  • The policies are issued either as participating policies or as non-participating policies. In participating plans, bonuses are declared while in non-participating plans bonuses are not declared.
  • Guaranteed additions and loyalty additions might be added under some endowment plans.
  • These plans pay the sum assured on death or maturity. Along with the sum assured, any type of additions which accrued during the term and any bonus added to the plan are also paid.
  • Optional riders are also available under endowment plans.
  • Loans are available under endowment plans wherein the policyholder can avail up to 90% of the surrender value as loan.

Why endowment policy is a good choice?

Endowment policies provide the following advantages which make them a good choice:

  • The benefits provided under the plans are guaranteed. Thus, there is no risk in the returns promised by endowment plans. For risk-averse investors, endowment plans make a good choice.
  • In participating endowment plans, bonus declarations enhance the benefits payable. This gives a good return to the policyholder. Even in case of non-participating plans, guaranteed or loyalty additions increase the benefits payable on death or maturity.
  • The plan provides insurance coverage as well as creates a corpus for savings need of the policyholder.
  • The premiums paid are allowed as a tax deduction under Section 80C while the benefits received are tax exempted under Section 10 (10D). Thus, endowment plans provide dual tax benefits not only on the investments but also on the returns generated from the plan.
  • Loan facility allowed under the plan provides policyholders funds when it is needed.

Best endowment plans in India

Here are some of the best endowment plans available in the Indian insurance market currently:

Plan name Sum assured allowed Salient features
Bajaj Allianz Life Super Life Assure Rs.50, 000 onwards
  • Provides two coverage variants
  • There are monthly incomes in one variant after the death of the insured
  • Bonuses help increase the benefit payable
  • Optional riders are available for enhancing the coverage
LIC’s New Jeevan Anand Rs.1 lakh and above
  • At least 125% of the sum assured is paid as a death benefit
  • Bonuses are declared under the plan
  • Accidental benefit rider is available
  • Attractive premium discounts are also available
ICICI Pru Savings Suraksha Rs.1.2 lakhs and above
  • Guaranteed additions and bonus are both added to the plan benefits
  • The maturity benefit is guaranteed
  • Policy loans are available
HDFC Life Sampoorn Samridhi Plus Plan Rs.65, 463 and above
  • Coverage is allowed up to 100 years of age
  • Limited premiums are required
  • Guaranteed additions and bonus declarations help in boosting the plan benefits
  • Accidental rider benefit is inbuilt in the plan
HDFC Life Sanchay Rs.100, 703 and above
  • Limited premium endowment plan
  • Guaranteed additions are promised during the term of the plan
  • Get 180% to 325% of the sum assured on maturity


The rate of bonus declarations depends on the insurance company’s profit earnings during a financial year. A bonus is, therefore, not guaranteed.

Surrender is allowed when the plan acquires a paid-up value. The plan acquires a paid-up value when the first two to three years’ premiums have been paid. If the policyholder wants he can surrender the policy and avail a surrender value.

Yes, interest is payable on loans were taken under the policy. The rate of interest depends on the company and might also change with changing times.

Yes, endowment plan allows three premium payment terms. Premiums can be paid in one lump sum, for a limited period and also throughout the plan tenure.

No, a bonus is not guaranteed in all endowment policies. Only if the policy is participating in nature, it would attract bonuses.

A participating endowment insurance policy is a policy which attracts bonus declarations. If the policy is participating, the bonus declared by the company would be added to the policy benefits.

Yes, besides the bonus additions, participating endowment plans have higher premiums than non-participating endowment plans.

Under many endowment plans, guaranteed additions are added to the policy benefits. These are guaranteed returns which are promised by the insurance policy. The rate of the addition is predetermined and the addition is paid at specific policy years. Guaranteed additions might also be paid under those endowment plans which do not earn bonuses.

Loyalty additions are returns which are promised by the endowment insurance policy if the policyholder continues the policy for a long term. These additions are a reward for the policyholder for maintaining his loyalty towards the plan. The addition is paid either once or twice over the plan tenure after the policy runs continuously for 10 to 20 years. The rate of loyalty addition is fixed and is mentioned in the policy’s benefit structure.

Loyalty additions do not depend on whether the plan earns a bonus or not. They are paid for continuing the plan over long tenures. As such, non-participating plans can also earn loyalty additions if such additions are a part of the policy benefit.

The bonus is declared only if the insurance company earns a profit in a policy year. If the company makes a loss in any year, no bonus would be declared. Thus, a bonus is not guaranteed to be paid every policy year.

Yes, riders are available under most of the available endowment plans. Policyholders can choose one or more riders as per their coverage requirements.

Yes, riders attract additional premiums. The premium for the plan would, therefore, increase with every rider selected.

The minimum term varies across different plans but it ranges from 5 years to 10 years.

Anticipated endowment plans are a money back endowment plans which pay a part of the sum assured periodically over the term of the plan.