Endowment Insurance

Endowment Life Insurance is the equivalent of a savings scheme which includes life insurance. Essentially, either you or your insurance provider will specify a time period for the insurance policy, usually a minimum of ten years. If you should die or become terminally ill during this period, the policy will pay out like a life insurance. Should you live beyond the end of the set period, you receive a lump sum known as the 'maturity value' of the policy instead. Some of the money that you pay in premiums will be invested, and any investment returns that this money earns will be added to the fund by your insurer: usually on an annual basis. If your money earns good investment returns, the sum assured (the money paid to your survivors in the event of your death) or the maturity value of the policy will also increase at a good rate.

In comparison to term insurance, endowment insurance usually requires you to pay higher monthly premiums because it is guaranteed to pay you money back. Despite these higher premiums, the level of life insurance cover is generally the same as that of term insurance or a whole-of-life policy. The benefit of endowment life insurance is that you are guaranteed to get some money back whatever happens, whereas term insurance will not pay out unless you die within a set period.

It should be noted that although endowment life insurance is a type of investment and savings plan, there are better alternatives if you are purely looking to invest or save long-term. For detailed information on other investment and savings options available see Savings Accounts and Investment Accounts.