Endowment Life Insurance
An inflexible life insurance policy can be limiting – permanently stowing away cash until you pass away. That’s where endowment life insurance comes into the picture, offering a more flexible approach to life insurance: one in which your policy acts both as your long-term life insurance and as an investment vehicle for a limited term.
An endowment life insurance policy can be used to save up for major expenses for a limited amount of time, but also provides security for your loved ones with payment that’s triggered in the event of your death.
In this article, we’ll cover…
- What is an endowment life insurance policy?
- How does it work?
- Should I get a life insurance endowment plan?
- What is a life insurance endowment with-profits?
- What is endowment savings life insurance?
- How to get endowment life insurance
- Why online calculators don’t give you the full picture
- What’s the difference between endowment and whole life insurance?
- Speak to an expert
What does endowment mean in life insurance?
A life insurance endowment policy is a life insurance agreement that’s also an investment product. It is set up as a regular saving plan which you pay into monthly and then receive a set pay out of a lump sum at the end of a set period.
The policy serves a dual purpose, it includes life insurance so if you die before the end of the term, a pay-out will be triggered.
They cover both life insurance while also acting as an investment vehicle for those looking for an effective long-term saving tool. There are many different types of endowment life insurance policy, and the one that’s right for you will depend on your individual circumstances and appetite for financial risk and reward.
Some policies could even include critical illness cover.
If you’d like help in finding out whether an endowment life insurance policy is right for you and which policy to take out, speak to an expert financial advisor who can help you evaluate your life insurance needs. Make an enquiry or give us a call on 0808 189 0463 for easy access to the right advisor for your needs.
How does an endowment life insurance policy work?
An endowment life insurance policy is a valuable tool that offers you security as well as a chance to benefit from investing your savings.
An endowment life insurance policy will make a payout to beneficiaries if the policyholder passes away during the policy term, alternatively, if the policy term reaches maturity the funds are paid directly back to the policyholder.
You make either annual or monthly payments into the policy and some of these funds are used to purchase life assurance. The remaining investment is usually invested on a with-profits or unit-linked basis. The size of the lump sum payout you get at the end of your insurance term will depend on how well your investments perform.
Make an enquiry to speak to an expert financial advisor who will help you understand which investment profile would be best for your situation.
Should I get a life insurance endowment plan?
An endowment life insurance plan could be right for you if…
- You want a pool of savings when the policy matures which can either be reinvested or used to enjoy your retirement.
- You want a low risk or risk free investment tool which is guaranteed to payout on the agreed date as long as you pay your premiums.
- You want to save for a particular long-term goal.
- You are okay with your investments going both up and down over time.
- You want a two in one investment and life insurance vehicle.
What is a life insurance endowment with-profits?
With-profits investments are designed to grow steadily in value due to the compound effect of bonuses gained being added. Some funds will also allow you to withdraw the bonuses occasionally rather than have them re-invested.
A financial advisor can give you guidance on the smartest way to save and invest by diversifying your investments and selecting a policy that’s right for your situation. However, if you choose to cash in these investments before the end of the term, you could lose some of the added value through a charge called the Market Value Adjustment, which is levied to protect other investors from financial loss.
What is endowment savings life insurance?
There are several different types of savings endowments; full, low start, and low cost endowments. These policies combine life cover and investment, but focus more on investments.
Your endowment savings life insurance policy could be invested in a number of ways…
- Unit linked – the premium is invested in units of an investment fund. Policyholders can usually choose which funds to invest their premiums in.
- Savings endowment policies – an investment product that’s set up as a regular savings plan and pays out a lump sum at the end of the agreed period.
- Mortgage endowment policies – are often taken out alongside an interest only mortgage. You pay a set amount every month, and when the policy matures you are paid out a cash lump sum intended to pay off your mortgage.
How to get endowment life insurance
If you’re looking to take out an endowment life insurance policy, you’ll need to search the market to find the best deals and top selling endowments.
To find an endowment life insurance policy that suits your investment and risk appetite, make an enquiry to speak to a financial advisor.
We work with financial experts who understand the endowment market and can give you a recommendation for the best policy and provider to choose.
Why online calculators don’t give you the full picture
To find the life insurance provider that will pay you back the best return for your cash, compare the offers on the market. You can do this using an endowment life insurance calculator which can be found online.
Many major providers of endowment life insurance will have an online calculator on their web page to help you see how much you would have to invest to get a certain lump sum payout.
However, the results will only give you an indication of possible returns, these returns are not guaranteed and your investment could rise or fall along with wider market dynamics.
That’s why experts recommend speaking to a financial adviser who can provide personal recommendations and advice depending on your situation.
What’s the difference between endowment and whole life insurance?
Both endowment and whole life insurance pay out a lump sum either to beneficiaries if the policyholder dies before the end of term, or to the living policyholder once the policy matures.
Whole life policies on the other hand are meant to last for the entire lifespan of the insured.
In other words, it’s much less likely that a whole life policy will mature before the death of the holder – it acts less like an investment and more like a life insurance policy.
Speak to an expert advisor today
Life insurance is a financial mechanism that helps you take a thoughtful and considerate approach to caring for your loved ones after your death. However, it’s a serious financial decision that will have a permanent impact on your bottom line so it’s important you’ve taken the time to research the implications and invest your hard-earned cash wisely.
A financial advisor will help you understand how your money would be best invested in an endowment life insurance so you can achieve your goals. They know which questions to ask to help evaluate your life insurance needs, and can take you directly to the lender and product that would be best for your situation.
Give us a call on 0808 189 0463 or make an enquiry to be put through to the right advisor for your needs and circumstances. We won’t charge a fee to introduce you and there’s absolutely no obligation.