Endowment Insurance

Definition - What does Endowment Insurance mean?

Endowment insurance is a policy that aims to combine the features of a life insurance and a financial plan, usually a college education for the child of the insured. Its premiums are more expensive compared to similar policies.

The policy matures on a fixed date and that is when the insured gets his or her payout.

Insuranceopedia explains Endowment Insurance

Insurance analysts are not so favorable about endowment insurance. In its desire to combine an education or savings plan and life insurance, it seems that the end result is can sometimes be that one does not get enough for both. Life insurance might be less than what is needed and the money for the college education might not be enough. There is even a tendency that the payout one gets after maturity is less than the sum of the payments.

The insured gets a fixed amount once the policy insures. However, when the insured's contributions are invested and the investments pay off, they get more than the fixed amount.

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