There are a number of options when it comes to life insurance and with the help of some basic research you will find that only a couple of plans will actually be able meet your requirements. In order to understand the meaning of Endowment Life Insurance policy, it is important to understand the basic features and understand the terms that are used to explain the same.
When any type of insurance is purchased the risk is immediately transferred to the insurance firm, which spreads the costs arising from unexpected losses to many of these individuals. However, in reality only a very small number of those insured will actually bear the loss.
There is a contract that is drawn up between the company and the applicant. As per the contract, the insurer promises to pay a certain sum of money or the death benefit to the beneficiary upon death of the policy holder. This is paid in exchange for the premiums you have paid. You will become a policy holder the moment everything is approved.
There are a few questions that you have to ask yourself and find the answers before opting for the insurance policy such as:
- Is there an event which is coming up which needs planning such as funeral expenses, college education, or a mortgage payoff?
- Does the beneficiary depend on your income?
- Is this policy for an investment or is it a temporary program, just in the event that something untoward happens in the near future?
- Is there enough money to purchase this plan?
- If in business, will you be able to fund the company in the event of the demise of your business partner or will you be able to buy up your cohort’s interests?
Endowment Life Insurance will provide a permanent sum of money or death benefit to the beneficiary I the event of death of the policyholder before the date of maturity of the policy or you will get paid if you live even after the policy pays out. There is a similarity between Endowment Life Insurance and whole life insurance except for one thing. If this is used before the endowment period, the life insurance will end. The face value will then become a living benefit. The other area of dissimilarity is the time of maturity. In general, the whole life insurance policy is supposed to mature at 100, but with Endowment Life Insurance, you can make the payments well before the final date, in lump sum, or for a limited period of time, and the cash value also builds up faster as the funds are supposed to be used while the insurer is still alive. However, the premiums are much more when compared to the other life insurance policies. The premium will get higher if the policy endows sooner. The endowment period may be set for 10, 20, or even 60 years for instance.
If you have some planned expense such as a wedding or college education etc., then the EndowmentLifeInsurance will be able to cover that need as well as that of life insurance.
