What is an Endowment Insurance Policy?
Answer:
An endowment policy is quite similar to a whole life policy


with a few modifications. Just as a whole life policy builds cash value, part of the endowment life insurance premium goes toward building up a cash value fund.

This type of policy usually comes with a higher premium than a comparable whole life policy carrying the same amount of insurance, because a larger portion of the premium goes to the cash value element.

Endowments mature and pay out the cash value at a specific time such as at a specific age or after a certain number of years. This type of policy usually guarantees that a certain amount of money will be available to either you or your beneficiaries when the policy matures or if you die beforehand.

So, if you have an endowment policy and live until it matures, you will receive a lump-sum payment equal to the amount of insurance you purchased (similar to a death benefit). If you die before the policy matures, your beneficiary will receive your death benefit.

Endowment insurance is often used to pay for future events that will have to be paid one way or the other such as college tuition. For example, if you have young children and want to be sure they have funds for college regardless of whether you live to see them through it, an endowment policy can help ensure they have the funds.
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