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Endowment Plan

Prepared by- Pooja Gupta

Definition An Endowment Plan is designed to provide a lump sum amount after certain specified term or death of a person whichever is earlier. the sum will be paid to the assured after a fixed period i. The insured gets the sum assured along with bonus and guaranteed additions that accrues during the term. .. The sum is payable to the legal heir/s or nominee named therein in case of death of the assured. Otherwise. till he attains a particular age.e.

Endowment Plan= Insurance + Savings . In this plan the specified period will be ten.Cont. fifteen. twenty years or up to certain age limit for which assured has agreed.

at the start of policy you will be assured with basic sum which is also equal to death benefit. If you are ready to play with the market risks then this is the best option. Thus final amount paid to you will be usually higher than the assured fund. Actually your premium amount will be pooled into company’s or some other investment and each year a bonus is added into your credit.Types of Endowment Plan  Unit-linked indowment This is a fixed term saving plan with an opportunity of life coverage. This guaranteed sum remains . However the amount you get at the end of maturity depends on the annual growth rate.  Full endowment In Full Endowment plan.  Unitised with profit endowment This is a form of profit endowment where the value of units is calculated annually and this value is guaranteed in order to form a minimum return amount. In this plan your savings can be invested in market shares thus the return you get from this completely depends upon on the performance of your investment.

If you are looking for a policy to pay off your mortgage then this will not help you but. this target amount will be paid as the minimum assured sum. In case of death. .  Low cost endowment  In this endowment plan the anticipated future growth rate of the amount will meet the target amount and the guaranteed life insurance element. However investor may increase the premium amount to collect the enough money to clear their mortgage. Non profit endowment  As the name suggests this plan does not add any bonus for the amount you pay as no sum is invested in shares.Cont.if you need only life coverage then you can opt for it. Usually Low Cost Endowment plan is used to pay off a mortgage and this is the major advantage of this policy.

  .Suitability If a person is desirous of the following can take endowment plansDual benefit of investment and insurance. Long term investment and want to receive a lump sum amount at the end of some years or maturity. Interested in tax-free investments because as per section 80C of Income Tax Act a person can enjoy tax benefit on the annual premium and as per section 10D death claim is completely tax-free. Ready to pay your premium in short period and want to enjoy the benefits from the plan over the policy term.

Disadvantages It is a low yield policy The premium is relatively higher than a term plan The surrender value is lower than the premium paid .

Companies offering this plan Kotak Life Insurance Aviva Life Insurance LIC .

Estoppel .

Definition A legal defence tool used when someone reneges on or contradicts a previous agreement or claim. Conceptually. estoppel is meant to prevent people from being unjustly wronged by the inconsistencies of another person's words or actions. . Estoppel prevents someone from arguing something contrary to a claim made or act performed by that person previously.

  . For example. which can prevent a person from going back on his word. Collateral estoppel is used to prevent legal harassment and abuse of legal resources.Forms of estoppel Equitable estoppel. if a mother states that a child is not hers. and Collateral estoppel. which can prevent a person from going back to court on the same grievance. estoppel could prevent her from later trying to claim child support payments from the child's father.

If you send in a late payment for your insurance premium. This gives policyholders some assurance that their interests will not be harmed when dealing with their insurer. This is because you were under the impression that a late payment would not lead to a policy cancellation. the insurance company cannot cancel your insurance if it has established a pattern of accepting late payments from other insured persons. based on the insurance company’s behaviour of accepting late payments from others without consequence.Estoppel in insurance Estoppel prevents an insurance company from adopting a position that is not consistent with a position it took previously if it would result in injury to the insured. .