Introduction
“I will invest in that dress I saw at the store last month.”
“Oh, that new bag, I am buying this saddle for sure.”
Desires never ends but means can.
At times your expenses can exceed the total income you have. If you live in the dilemma of whether you can spend or not, you must think twice before planning the next expenses. Wise men always say that spending your hard earned money is easier, but it is your savings that will protect you in the odds.
Decoding the requirement of savings is not a big code to crack. And the easiest way in which you do it is by buying a life insurance endowment plan.
Insurance policies are a must buy as soon as you get independent. So, well before you plan a list of things that you can buy from your first salary, make sure you put your money in the endowment plan. The first salary investment you make should be your first step for a secured future.
Let us read further on how the ULIP plan helps and what are the benefits?
Table of Contents.
Why start investing from your first salary?
What is an endowment plan?
Reasons:
– Dual Benefit
– Financial Discipline
– Low Risk
– Guaranteed Returns
– Tax Benefits
Conclusion
Why start investing from your first salary?
As soon as you begin earning, you gain a sense of accomplishment and independence. And before you go overboard with the expenditures, it is relevant that you start investing from your first salary.
The first salary mark is crucial because that induces in you the habit of disciplinary savings. Gradually you have a huge fund ready for your long term as well as short-term goals.
But why begin with the endowment plan? Let us read this next.
What is an endowment plan?
An endowment plan is a life insurance policy that provides both insurance as well as investment benefits. A life insurance endowment plan is also called as savings plan. It is the insurance cover that makes disciplinary savings as a part of your investment routine. The policy provides guaranteed savings for your financial goals. You get both, the death benefits as well as maturity benefits under the policy.
When protecting your family along with creating a huge fund is the aim of your life, buying an endowment plan is the safe option.
For example, if you want to save the money for say 11 years, you will have a good amount to pay off your mortgage. Keeping aside money can be a challenge especially when you have a big family and you are the sole-breadwinner.
5 Reasons to Buy a life insurance endowment plan with your First Salary.
You can quickly go and buy a packet of milk, a chocolate, or any other grocery item without a second thought. But when it is about investing your money in assets or insurance policy, you want to be doubly sure of the returns.
Well with the endowment plan , you have read that the benefits are guaranteed. Still, if you are in thoughts as to why buy a life insurance endowment plan with your first salary, you must read these 5 reasons.
- Serves dual purpose: Endowment plan is a type of life insurance plan that serves the dual purpose of providing life insurance cover and long-term investment benefit. It implies that life assured can enjoy the benefits of a life cover and get the chance to grow the corpus. The accumulated funds can be used to fulfil your purpose of buying a car, or paying for your child’s dream.
- Risk-free returns: Endowment plan offers stable returns and this is why it is called risk-free insurance policy. The plan assures of guaranteed returns after a specific period of time but only if the premiums are paid regularly. When you get your first salary thinking of investment is rare because it takes time to understand the dynamics of monthly expenses. For some, sparing monthly savings can be difficult but only till the time they know about endowment plans. The returns are low but safe making the insurance policy a safe choice for the youngsters also.
- Death and Maturity Benefit Payouts: Under the endowment plans, you get both the death benefit as well as the maturity benefit payouts. The death benefit helps the family dependents/nominee to manage the expenses after the death of the policyholder. Apart from the death benefit, if the life insured survives the entire policy term, she/he is liable to receive a maturity benefit. The life insured can choose to receive the maturity benefit as a lump sum amount or as a regular monthly income.
- Additional Income Benefit: Your first salary can give you the happiness of ruling the world. But the fact is if you do not have sufficient funds or if your expenses are higher than your income, you always look for alternative means of income. Under an endowment plan, you can avail the benefit of receiving an annual bonus that the insurance company declares. This amount of annual bonus is a predefined percentage of the sum assured which is paid at the maturity of the policy. In case of unexpected demise of the life insured, the nominee is eligible to receive the annual bonus along with the death benefit.
- Tax Benefit: First salary is a matter of pleasure and pride for every individual. If the salary is high, there are chances you will receive it after deducting the tax. But if the salary is just sufficient, you will always think of saving more. If you chose saving through endowment, it will also save you tax. The insurance policy provides you tax benefit under Section 80C of Income Tax Act, 1961. The maximum tax deduction allowed under section 80C is up to Rs.1.5 lakhs. Apart from the annual premium paid, the proceeds from the policy are also tax-exempt under Section 10(10D). The condition applies only if the premium paid is 10% of the sum assured or the sum assured is a minimum of 10 times the premium paid.
Conclusion
Endowment plan is a combined product of insurance as well as investment. The plan is helpful for those who want to save for long term future goals. Endowment plans are a good choice of investment. The income from this insurance policy can be of great help and as an additional income to help you complete the financial objectives. When you buy an endowment plan from your first salary, it gives you a sense of protection and helps you develop a habit of saving. Sooner you start, the better you get returns!
