Endowment Life Insurance Author:    Posted under: Life InsuranceLife Insurance Types


Endowment insurance, also more commonly known as endowment life policy or endowment policy, is an insurance policy that guarantees a sum of money that the insured or their beneficiaries will get when the predetermined contract period reaches its end.  It is a contract specifically intended to pay a lump sum after a specific term or on earlier death, whether the policyholder lives until the policy reaches its maturity or dies sooner. When the insurance period or term reaches its end, the policyholder will collect the benefit of the insurance policy or the amount paid at death except if the policyholder died earlier; in which case the policyholder’s beneficiary will get the money, leaving the insured’s family financially independent.

An Endowment life insurance combines the benefits of a saving scheme and a life insurance policy together with all the benefits that it offers. With this kind of insurance, the policyholder will collect a lump sum payout at the end of the term at face value, although the amount given at the term’s maturity is usually associated to the stock market, meaning the amount you receive could be a smaller amount than what you pay in. However, should the policy holder die before the term is ended, their family will receive a lump sum to aid them towards funeral expenses costs or covering for any bills left unpaid like mortgage costs and the like.

Like any other insurance, this type of policy has its own advantages as well as its own disadvantages. An insurance policy like this has the advantage of offering a savings aspect that allows, in time, the cash value of your benefit to grow. The very purpose or idea of an endowment life insurance is to ensure a form of living benefit which is the amount at face value to the policyholder, so it can be acquired as a form of retirement fund. This is because when a policyholder outlives the term’s maturity date, you can still use the money and enjoy it as you see fit.

In contrast, having premiums that are relatively higher than most insurance policies and still getting the same coverage is quite considered by many as a disadvantage. However, endowment insurance benefits can also be used for personal needs, such as putting up a business or replacing your income on your retirement. In case of death however, your loved ones will surely be taken care of upon having a safe source of money to pay bills or mortgage dues that would still keep coming long after you are gone. But on the lighter side, should the policyholder outlive the predetermined end of the term, he or she would have the freedom of putting up his or her money for good use, such as using it as a capital to start a business for your family. Also, since an endowment policy has a high cash value, one good benefit is that you can get a good enough loan against it to start your business.

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