Thursday, May 19, 2022

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    Why is an Endowment Plan Better Than a Fixed Deposit?

    Having a safety plan for the future is really necessary. It not protects you but also the ones you care about. Let us look into why an endowment plan is better than a fixed deposit.

    Endowment insurance is a savings product with a limited amount of life insurance. You pay your premiums (savings contributions) every month, which are calculated depending on the amount you desire to receive at the end of the plan’s term. 

    Whereas, a fixed deposit profile is a low-risk, moderately flexible savings account that allows you to grow your money. You deposit monies to the bank for a set period of time, ranging from one week to three or more years, similar to endowment plans.

    Endowment insurance plans and fixed deposit accounts may appear to be identical on the surface. Both types of savings accounts offer a variety of tenure options, deposit quantities, and returns. 

    However, there are several key differences that can make one form of saving choice far superior to the other for you. We present an in-depth comparison of endowment insurance plans and fixed deposit accounts below, as well as advice on whether one could be better for your goals. To know why exactly are endowment plans better than fixed deposits, read further!

    Fixed Deposits and Endowment Plan: A Quick Comparison:

    Here are a few comparisons between the two plans. Read on!

    1. Tenure

    Fixed deposits can be used for both long and short-term investments, with terms ranging from one to five years.

    The endowment policy, on the other hand, provides life insurance as well as pension schemes for a term length of 10 years, which can be extended up to a lifetime.

    2. Investment

    With a small expenditure of Rs.1,000, you can begin investing in fixed deposits. The maximum investment, on the other hand, is unrestricted. The bank measures the interest based on the amount invested.   

    As a general rule, the more you invest in FDs, the better the long-term return you will be able to earn. In the context of an insurance policy, on the other hand, the payment varies from program to program and is calculated by a variety of factors such as the policyholder’s age, the policy’s value, the insured’s health, and so on.


    Fixed deposit programs assist you in developing a habit of saving, whereas endowment plans offer you financial protection so that you can deal with life’s unexpected events.

    Fixed deposits, depending on your needs, are an excellent investment option if you want to build wealth over time while receiving a guaranteed return. 

    However, if you want the benefit of life insurance as well as the reward of investment, you should consider purchasing a guaranteed return insurance plan.

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