One of the many types of life insurance policies on the market, endowment life insurance is a popular choice for those who would like to have the opportunity to see the policy pay out during their lifetime. An endowment life insurance policy can be seen as a form of investment that is also a life insurance policy.
Much like a whole or universal life insurance policy, an endowment life insurance policy has a cash accumulation value and also a date at which the policy matures and thus pays out. However, with a whole or universal policy, the date of maturity is an age that few people live to see, such as 100 years old, making more likely that the policy will pay out upon death than actually mature while the insured person is still alive.
An endowment life insurance policy has a much shorter term and will pay out, or “endow” at a pre-determined age, or after a certain number of years. The shorter you want the term of the policy to be, the higher the premium you will pay. This type of policy will build up the cash accumulation account much faster and mature usually when the insured is still living. Should the person who is insured die during the policy period, however, the policy value and the cash accumulation account will be paid out to the beneficiary just as with a whole life insurance policy. It is thus more of a combination between a whole life and a term life policy.
Many people use an endowment life insurance policy in order to provide a sort of savings account or with the purpose of using the money for something specific, such as a child’s college tuition. Thus they will select a policy period that allows the policy to endow when it will be needed and provide the cash to the living to use for the previously determined purpose. Some people choose to have their endowment life insurance policy pay out upon retirement so that they can use the money to supplement their other retirement savings accounts.
Setting up and paying premiums on an endowment life insurance policy is just a little different from a whole life or a term life policy. In order to choose the correct policy and determine when it should mature and how much you will pay into it, you will need to spend some time with an insurance agent who knows these policies well.
An endowment life insurance policy is not the right choice for everyone. If you want a policy that will last throughout your life, you will want a whole policy. If you want more affordable policy, a regular term life insurance policy might be right for you. The endowment life insurance policy serves a particular need, and to be certain it works for you, you should discuss all of your options with an insurance agent. Sometimes, a combination of more than one policy is the best choice to provide the best level of coverage and keep all your bases covered.