Endowment Insurance
What Does Endowment Insurance Mean?
Endowment insurance is a policy designed to combine the features of life insurance and a financial plan, typically aimed at funding a college education for the insured’s child. Its premiums are higher compared to similar policies.
The policy matures on a fixed date, at which point the insured receives their payout.
Insuranceopedia Explains Endowment Insurance
Insurance analysts are generally not favorable toward endowment insurance. In its attempt to combine an education or savings plan with life insurance, the result may sometimes be insufficient coverage for both needs. The life insurance component might provide less than what is necessary, and the funds allocated for college education may also fall short. Furthermore, there is a tendency for the payout received upon maturity to be less than the total contributions made.
The insured receives a fixed amount once the policy matures. However, if the insured’s contributions are invested and those investments yield returns, they may receive more than the fixed amount.
