The two basic payouts

The LIC Endowment Assurance Plan is a life insurance policy. Hence, it comes with a death benefit on the passing of the insured. This savings oriented policy also makes a lump sum payment at the age specified by the insured. The lump sum can be used when you child seeks admission to a foreign university or it put into an annuity that pays out during your retirement years.

Protected from accidents

One of the advantages of the Endowment Assurance Plan from LIC is that it throws in a disability benefit and an accident benefit. The disability benefit is available for a single insured life and applies to the first Rs. 20,000 of the sum assured. This comes into play if the insured becomes "totally and permanently disabled" anytime up to the age of 70 provided that the policy is still in force. The insured's inability to pay any further premiums does not harm the policy in any way.

In addition, the insured can ensure an accident benefit by paying extra premium of Re. 1 per every Rs. 1,000 of coverage.

With-profits policy

LIC also offers customers the opportunity to share in the company's annual profits by turning the Endowment Assurance Plan into a "with profits" policy. Under this feature, the customer is able to share the surplus profits of the insurance giant, which is known to distribute large bonuses among policyholders.

Premium Payment

For an endowment policy, the premium amounts are moderate compared to competitor plans. The policy also provides flexibility with respect to premium payments.For instance, the policyholder has the freedom to pay premiums on a monthly, quarterly, half-yearly or yearly basis. A fifth mode of payment is the salary saving scheme option-one that finds favor among numerous salaried employees around the country. Furthermore, the insured decides the duration of the premium payment period. As per the policy, the maximum period is 75 years.

However, the policyholder can decide on a smaller duration of premium payments-for instance, until the end of his salaried life-or even decide to pay the entire premium in a single lump sum. Whatever the case, the final endowment will be paid only when the policy matures or when the insured dies, whichever is earlier.

The policy becomes paid up after at least three years of premiums have been paid. Thus, even if the policyholder stops paying premiums on this policy any time after this point, a sum assured in proportion to the number of premiums paid will be in place. However, the resultant sum assured should not be less than Rs. 250 excluding accrued bonuses.

Who is eligible?

With minimum and maximum entry ages of 12 years and 65 years respectively, the LIC Endowment Assurance Plan works for a wide range of people. It makes for a great education fund or a retirement fund. The policy term can be anywhere between 5 to 55 years.

Written By: Deepak Yohannan
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal

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