Friday, November 5, 2010

Endowment Policy Buying Guide

Endowment policy is a combination of life insurance and investment growth saving plans. It is a premium based package that is valid for a specified period. The premium paid by the policy holder into the endowment is invested by policy office in the stock market. On the maturity of the endowment policy the policy holder is paid the agreed amount along with bonuses. Incase the policy holder dies in mid-term then the insurance amount is paid to his beneficiary. Endowment policies are also used for repaying the mortgages but incase of endowment mortgage the monthly premium will also include the interest on the loan.

Evaluate your needs: There are various types of endowment policies namely non-profit Endowment Policy, Traditional With Profits Endowment, Low Cost Endowment Policy, Unit Linked Endowment Policy, and Traded Endowment Policy. Each has its own pros and cons as their workings and methods of growth are different from each other. It is advisable that the policy holder should evaluate his financial needs and consults a professional before buying an Endowment Policy. Educate yourself to understand the features of each type of insurance policy and then select the policy that benefits YOU personally and suits YOUR needs.

Check the reputation of the insurance company: Make sure you select the top endowment company for buying an endowment policy. The reputation and previous records should be checked thoroughly before making the final decision to buy an endowment. Find out the company's market standing. Don't trust your agent blindly and verify the facts yourself. Go for company with credible ratings given by a credible agency.

Evaluate the Front-End Loading: The set up cost, administration charges and commission payments are usually higher in the early years and are hidden within the monthly premiums. These initial costs are known as front end loading. Therefore, before you choose an endowment find out the charges and past performance of the fund.

Check the Endowment Mortgage Fee: Incase of endowment mortgage, calculate the mortgage fees carefully and try to evaluate the mortgage package before buying an endowment policy. At times, the lender charges additional front loan or processing fee, so carefully plan the investment to avoid defaulting.

Endowment Selling and Surrendering Options: A good alternative to surrendering is endowment policy selling. In this, the policy holder can sell the policy in TEP market and fetch a fair value of the policy. The main advantage here is that the policy holder usually gets much more than the surrender value offered by the insurance company.

More Endowment Policy Buying Tips

* Take help from a financial consultancy as it is a long-term investment.
* Check the amount of premium payments and your affordability.
* Carefully read and review the insurance agreement before signing for it.
* Invest only if you intend long-term investment as surrendering it in early years can prove costly.
* Do thorough study and clear out all your doubts with insurance company and the financial advisor before you strike the deal.
* Check the flexibly plan and alternate options for protection against uncertain changes in your financial needs.
* Select a reliable insurance company and choose a right policy to gain maximum benefits and tax relief.

For selling or surrendering your endowment policy, contact You can also seek expert advice for valuation and get free compensation assessment of your endowment policy.

Robert Prime is a professional author who has written many articles on various topics & this time writing article on Endowment Policy Buying Guide.


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