An endowment life policy is an insurance contract that comes with both a term life insurance policy and a saving component. Unlike permanent life insurance policies, endowment life insurance policies allow the insured to receive a lump sum amount after the maturity date or when the insured dies, whichever comes first. So even if you die before your money matures, your child or beneficiary will receive your payout. But remember, a portion of your premium will be used to provide life insurance, while the other portion will be invested in a saving account. This means that you will only get minimal interests if you opt for an endowment life insurance policy.
This type of insurance policy is designed to help students and other clients to insure their life within a specific period of time and to get an accumulated sum of money when their policy matures. Most endowment life insurance policies, however, mature after 10, 15, or 20 years. Nevertheless, policyholders can still cash out their money before the maturity date. They can do this by surrendering the policy, a decision that comes with surrender fees of about 10% of the lump sum.
Who should get an endowment life insurance policy
- People who want to insure their lives and get a lump sum of money after a certain period of time
- People who want to offer financial support to their family or loved ones when they are no more
- People who are not concerned about making huge interests on their money.
- People who want a low-risk plan that comes with the benefit of insurance and investment.
Click here to know the pros and cons of endowment life policy.