Endowment Policies
Although endowments are life policies, in their basic form they are not designed to provide a high degree of protection.
This is because the majority of premiums are used to provide the investment element rather than life cover.
Unlike whole of life policies, which provide cover throughout life, endowments mature at a specific date.
The proposer selects the sum assured and the term, which is usually at least 10 years.
The level of premiums are fixed at the outset and are normally payable throughout the term.
The sum assured is payable either on the death of the life assured during the policy term or on survival to the maturity date.
There are three main types of endowments:
- with-profits,
- low-cost, and
- unit-linked.