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Compare Endowment life insurance

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An endowment life insurance policy is an insurance policy where the death benefits of the policy equal the face value at a particular period of time, which is when the individual receives the cash value of the policy. This could be decided by the policy holder who can thereby plan this policy as a retirement income. You should look at endowment life insurance quotes to check what premiums have to be paid for a stipulated amount of sum assured. This amount and the premium depend on the individualís budget.

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Why do you need endowment life insurance policy?

Endowment life insurance policy is required when you are not sure of a fixed income after a particular age or time period. In such a scenario, you need to plan for an alternative that will take care of the liabilities of the individual when they donít get their fixed income after a particular stage. So, you can plan this as an investment where you will get back the cash value at the maturity of the policy or your beneficiary receives the death benefits in case of the death of the policy holder. Thus it serves two purposes.

How is it different from whole life insurance?

Whole life insurance policy is an endowment life insurance policy except that the maturity age is 100. In other words whole life insurance needs premiums to be paid for a longer time. However, the duration of premium payments is shorter in case of endowment life policy. The amount of premium is fixed in a way as to reach maturity at a fixed time period. It is a good option if you want to retire at a particular age.

Endowment policy comprises of two components. There is a sum assured, which is guaranteed for the individual upon maturity of the policy. The other component is a variable component, where the cash value is incremented through bonuses. The value of these bonuses depends on the performance of the investment component and therefore on market conditions.

Benefits of endowment life insurance policy

Endowment life insurance policy proves useful when the policy holder is the sole earning member of the family and there are liabilities that need to be paid off in case of his or her death. At the same time, the cash amount will accrue in the insurance account, making it an investment too for the future. You can use the endowment life insurance policy as an education fund for your children, whom you expect to reach college by that time. It could also be a savings fund for your daughterís marriage. Children will get the death benefits too, if their earning parent passes away prior to the maturity date of the policy. Unlike a term policy, the policy holder gets a chance to redeem the premium amounts paid, in case they donít pass away before the maturity date of the policy.

Disadvantages of the endowment life insurance policy

The premiums of the endowment life insurance policy are higher compared to whole life insurance. This is because the premium payment period is reasonably shortened. The premium amount would depend upon the time frame you choose for the maturity of the policy. Secondly, the rate of return is lower compared to other financial instruments. This is because there is death benefitsí coverage included in the policy.

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