Endowment Insurance plans at one time were the most popular and in demand policies in India. Endowment plans are very popular as they serve two purposes life cover and savings. Since the private players came in the market , ULIP 's seemed more attractive and were taken over by the other policies. Last year, of the new insurance policies sold by private insurance companies Ulips accounted for around 90% of the policies. Although ULIPS are hot cakes at the moment,yet for Life Insurance Corporation of India (LIC),their endowment policies are the main policies being sold in today's scenario.

Following are certain things that individuals should consider about endowment policies:-
An endowment policy is a combination of insurance and investment. The life of the individual taking the policy is insured for a certain amount. This life cover is referred to as the sum assured. A certain part of the premium gets allocated towards this sum assured. Some portion of the premium is allocated towards the administrative expenses of the insurance company selling the policy. The remaining portion of the premium gets invested. An endowment policy may declare a bonus every year. The money that is invested generates a certain return every year. This return may be declared as a bonus. This bonus is typically generated as a certain proportion of sum assured or life cover as it is popularly known. Bonus declared is not payable immediately it is only accumulated and not compounded. If the policyholder dies during the policy term, the nominee gets the death benefit the sum assured and accumulated bonuses.
Endowment policies invest their corpus mainly in government securities and since the bonus amount is not compounded the returns are likely to be low. But as your funds are invested in government securites your money is safer and there is a surety of returns.