Definition of endowment policy
Noun
endowment policy (plural endowment policies)
- a life assurance savings scheme designed to pay out a lump sum when the policy matures
Related terms
Further reading
An endowment policy is a life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or on earlier death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.
Policies are typically traditional with-profits or unit-linked (including those with unitised with-profits funds).
Endowments can be cashed in early (or 'surrendered') and the holder then receives the surrender value which is determined by the insurance company depending on how long the policy has been running and how much has been paid in to it.
References:
- Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.
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