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Endowment Policy |
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 An endowment policy is a life insurance contract designed to pay a lump sum after a specified term or on earlier death. It is most popular kind of insurance plan. The Endowment policy covers the risk for a specified period at the end of which the sum assured along with the entire bonus accumulated during the term of the policy is paid back to the policy holder. These complicated financial products combine life insurance and investment growth in one package. With endowment policy, you do not repay any of the capital you borrow during the term of the loan. Instead, the endowment policy should grow to produce a lump sum large enough to repay the loan in full at the end of the pre-agreed period, normally 25 years . As compared to whole life policies, the premium rates for endowment policies are higher and the bonus rates lower.
Different Types of Endowment:
Two different types of endowment insurance policies are as follows
- With-profit : In this type of insurance policy the insurer chooses a combination of options to invest your premiums
- Unit-linked : Under this policy the insurer allocates the premiums into various units. The insured is also given the opportunity of choosing the option of investment units
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