Endowment Policy

Dual Benefit: Endowment policies offer both a death benefit and a maturity benefit. If the insured person passes away during the policy term, the death benefit is paid out to the beneficiaries. If the policyholder survives the policy term, a lump sum maturity benefit is paid to the policyholder.

Policy Term: Endowment policies have a fixed policy term, which can range from 10 to 30 years or even longer. The policyholder pays regular premiums throughout the term, and the policy remains in force until the end of the term or until the insured person’s death, whichever occurs first.

Savings/Investment Component: A portion of the premium paid for an endowment policy goes towards the life insurance coverage, while the remaining amount is invested by the insurance company on behalf of the policyholder. The investment component accumulates a cash value over time, which grows on a tax-deferred basis.

Maturity Benefit: If the policyholder survives the policy term, a maturity benefit is paid out. This lump sum payment is typically a predetermined amount, which includes the accumulated cash value and may also include bonuses or dividends, depending on the policy terms.

Guaranteed Returns: Endowment policies often provide guaranteed returns, ensuring that the policyholder will receive a specific minimum maturity benefit. The guaranteed returns are determined by the insurance company and may vary depending on the policy terms and prevailing interest rates.

Surrender Value: If the policyholder decides to surrender the policy before its maturity, a surrender value is payable. The surrender value is the cash value accumulated up to that point, minus any applicable charges or penalties imposed by the insurance company.