All about 10-year Endowment Policies

A 10 years endowment policy is a life insurance plan designed to offer both savings and protection benefits within a short policy term of 10 years. It is ideal for individuals looking to build a financial corpus while ensuring life coverage for their families. This plan is especially beneficial for those who want to achieve short-term financial goals, such as funding a child’s education, creating an emergency fund, or saving for a down payment on a house.

The plan works by allowing the policyholder to pay regular premiums for 10 years. At the end of the policy term, a guaranteed maturity payout, along with any bonuses, is provided. If an unforeseen event occurs during the policy term, the nominee receives a death cover, offering financial protection to the family. The 10 years endowment policy combines disciplined savings, risk coverage, and assured returns, making it a smart financial tool.

• A 10 years endowment policy combines life insurance with short-term savings.
• Policyholders receive guaranteed maturity payouts with bonus additions.
• Flexible premium options include regular, single, or limited payment modes.
• Eligibility depends on age, sum assured, and medical requirements.
• The policy offers significant tax benefits under Sections 80C and 10(10D).

A 10 years endowment policy offers a host of benefits, making it a practical choice for short-term savings and protection.

• Guaranteed returns: At the end of 10 years, policyholders receive a guaranteed maturity sum, ensuring financial security.
• Life insurance protection: The plan provides financial security to the family in case of the policyholder’s untimely demise.
• Short-term savings goal: With a fixed term of 10 years, the plan helps achieve financial goals within a relatively short period.
• Bonus additions: Depending on the insurer’s performance, annual and terminal bonuses may be added to the maturity benefit.
• Flexible premium payment: Premiums can be paid monthly, quarterly, half-yearly, or annually, as per convenience.
• Tax benefits: Premiums and payouts are eligible for tax deductions under Sections 80C and 10(10D) of the Income Tax Act.

These benefits make the 10 years endowment policy a reliable option for individuals seeking short-term savings with assured protection.

To purchase a 10 years endowment policy, individuals must meet specific eligibility criteria set by the insurer. These criteria ensure the plan is accessible to a broad range of individuals.

Age at entry:

• Minimum entry age: 18 years
• Maximum entry age: Typically between 55 to 60 years, depending on the insurer.

Maturity age:

• Minimum maturity age: 28 years
• Maximum maturity age: Usually 70 years.

Sum assured:

Insurers often specify a minimum and maximum sum assured, starting from Rs. 50,000 and going up based on the individual’s income and financial needs.

Premium payment term:

The premium payment duration matches the 10-year policy term.

Medical requirements:

Depending on the sum assured and age, some individuals may need to undergo medical tests.

Meeting these criteria ensures a smooth policy issuance process, enabling individuals to benefit from life insurance and guaranteed savings.

The 10 years endowment policy offers flexible premium structures to suit different financial preferences and incomes.

• Regular premium payment: Policyholders pay premiums throughout the 10-year term in monthly, quarterly, half-yearly, or annual instalments.
• Single premium payment: A one-time premium payment can be made at the start of the policy for those who prefer convenience.
• Limited premium payment: Some insurers allow premium payments for a shorter duration (e.g., 5 or 7 years), while the policy continues for 10 years.
• Premium amount: The premium depends on factors like the sum assured, policyholder’s age, and chosen payment frequency.
• Grace period: Insurers offer a grace period (30 days for annual/half-yearly and 15 days for monthly premiums) for delayed premium payments.

The flexible premium structures ensure that individuals can manage their financial commitments effectively while benefiting from life coverage and savings.

Maturity benefits are one of the most attractive features of a 10 years endowment policy, ensuring financial stability at the end of the policy term.

• Guaranteed sum assured: The policyholder receives the sum assured on surviving the policy term.
• Accrued bonuses: Annual bonuses declared by the insurer are added to the maturity benefit, enhancing the payout.
• Terminal bonus: A one-time terminal bonus may be provided at the end of the policy term.
• Fixed payouts: Maturity benefits are fixed and guaranteed, ensuring financial security.
• Short-term financial goals: The maturity payout can be used for immediate needs, such as higher education, wedding expenses, or purchasing assets.

These benefits ensure that policyholders receive a lump sum amount at the end of 10 years, providing financial support to meet planned expenses.

A 10 years endowment policy offers significant tax advantages, making it an efficient savings and insurance tool.

• Section 80C: Premiums paid for the policy are eligible for tax deductions up to ₹1.5 lakh annually.
• Section 10(10D): The maturity or death benefit received is tax-free, provided the premium does not exceed 10% of the sum assured.
• Tax savings on bonuses: Any bonus accrued and paid at the end of the policy is also tax-exempt under Section 10(10D).
• Tax benefits for nominees: In case of the policyholder’s death, the sum assured paid to the nominee is exempt from tax.
• Hassle-free deductions: Premiums can be claimed as deductions while filing annual income tax returns.

By leveraging these tax benefits, policyholders can maximise their savings while securing life coverage and assured returns.

A 10 years endowment policy is an excellent option for individuals looking for short-term financial planning with added life coverage. It offers guaranteed maturity benefits, flexible premiums, and tax advantages, making it suitable for achieving immediate goals while ensuring financial security for loved ones. With its disciplined savings structure and risk protection, this policy serves as a reliable financial tool for Indian families.