Endowment Life Insurance

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What sets an endowment life insurance policy apart from other life insurance products is that it guarantees that you or your beneficiaries will receive a set amount of money whether you live until the policy matures or whether something should happen to cause your untimely death.

Endowment life insurance also has the benefit of a whole life insurance in terms of providing a savings component, which allows the cash value of your policy to increase with time. And if you live until your endowment life insurance matures, you get a lump sum payout.

Benefits and Disadvantages of an Endowment Life Insurance Policy

The main goal of an endowment life insurance policy is to provide a LIVING BENEFIT to the insured—life insurance protection being only a secondary benefit. Therefore, this type of insurance is great for building a retirement fund, since you can still enjoy your money if you live past its maturity.

The drawback of an endowment life insurance policy is that its premiums are higher than a whole life insurance policy for the same coverage amount. However, the cash value of endowment life insurance is also higher. This makes it a great way to accumulate capital. Since its higher cash value makes it better collateral for loans, investors typically purchase endowment life insurance policies with the goal of using it to fund certain needs.

Using endowment life insurance for personal needs

• Replacement income – Your endowment life insurance can give your surviving family an assured source of money to pay for the bills and dues that will continue to come in if you should meet an untimely death. It can also be a good source of retirement income for you should you live past the term set in the contract.
• Estate planning – Your endowment life insurance fund can be used to pay for any inheritance taxes that come with your estate so as not to burden your spouse and children. Or if you are the one who inherits certain non-cash assets, you can make a loan against your policy with a lower borrowing rate than if you were to go to a bank and use your inherited assets as collateral.
• Charity – You can even invest in endowment life insurance to make sure that some good comes from your money even after you are gone by naming a charitable organization, a school, or a church as your beneficiary.

Using endowment life insurance for business needs

• Business continuation – An endowment life insurance fund is a good way to keep a business running with operational capital even after the untimely death of a key person.
• Business capital – Since an endowment life insurance policy has a high cash value, you can borrow against it for capital to start your own business. You not only get low loan repayment rates, there is also no possibility that your request for a loan will be rejected, unlike if you were to approach a bank for a business loan.