Pure Risk Cover Term Policy:
1. Premium is very low for a given sum assured.
2. There are no returns at all.
3. Policy cannot be pledged for taking loan.
4. Since the premium is low tax saving from it will also be low.
5. Sum assured shall cease after the policy term.
Endowment Policies:
1. Premium is higher for a given sum assured.
2. Completely tax free returns on the premium.
3. If premium is paid for at least three years then some policies can be pledged for taking a loan. The rate at which you get loan is lower than other personal loans. During this period the policy is also continued.
4. Tax savings up to 1 lac is possible.
5. Some policies offer sum assured even after all the maturity of policy. So you get the returns and don't have to pay any more premiums but risk cover would still remain.
Now you must be thinking that if endowment policy has so many good features then why should we go for the other one. Well, the companies are not a fool to introduce pure protection policies. In a pure protection policy an amount is paid as a yearly premium for a given sum assured. This amount is also deducted from the premium paid in the endowment or money back policies. So the amount which gets invested in endowment or money back policies is what remains after deduction. Also the returns that we can get from endowment or money back policies is usually less than returns from PPF or from investment in mutual funds through SIP. So now that you have a fair idea about these policies I am sure you can take a good decision when buying a policy.
What is Moneyback policy ? It is same like an endowment policy. The only difference is that here you get some money in the form of returns after every few years ( e.g. after every five years ) till the policy term. Returns are usually lesser than endowment policies.
1. Premium is very low for a given sum assured.
2. There are no returns at all.
3. Policy cannot be pledged for taking loan.
4. Since the premium is low tax saving from it will also be low.
5. Sum assured shall cease after the policy term.
Endowment Policies:
1. Premium is higher for a given sum assured.
2. Completely tax free returns on the premium.
3. If premium is paid for at least three years then some policies can be pledged for taking a loan. The rate at which you get loan is lower than other personal loans. During this period the policy is also continued.
4. Tax savings up to 1 lac is possible.
5. Some policies offer sum assured even after all the maturity of policy. So you get the returns and don't have to pay any more premiums but risk cover would still remain.
Now you must be thinking that if endowment policy has so many good features then why should we go for the other one. Well, the companies are not a fool to introduce pure protection policies. In a pure protection policy an amount is paid as a yearly premium for a given sum assured. This amount is also deducted from the premium paid in the endowment or money back policies. So the amount which gets invested in endowment or money back policies is what remains after deduction. Also the returns that we can get from endowment or money back policies is usually less than returns from PPF or from investment in mutual funds through SIP. So now that you have a fair idea about these policies I am sure you can take a good decision when buying a policy.
What is Moneyback policy ? It is same like an endowment policy. The only difference is that here you get some money in the form of returns after every few years ( e.g. after every five years ) till the policy term. Returns are usually lesser than endowment policies.
No comments:
Post a Comment