Endowment Life Assurance

Endowment life assurance is a life assurance product which is designed to pay out a lump sum to the policyholder after a specified term. Endowment life assurance policies are typically with profits or unit linked.

Full and low cost endowment life assurance

A full endowment life assurance policy is a with-profits endowment. With this form of endowment life assurance, the basic sum assured is the same as the death benefit at start of policy.

A low cost endowment life assurance product is also a with-profits policy. However, the basic sum which is assured with an endowment life policy reduces over time whilst working alongside an element of life assurance. The guaranteed value of this form of endowment life assurance grows each time bonuses are added. This is usually on an annual basis, although some policies also benefit from a bonus at the end of the term - terminal bonus.

The point of a low cost endowment life assurance product is that the life assurance element, alongside the basic sum assured and bonuses, repay the target amount in the event of a death. If the policyholder, who's life is being assured, lives for the full duration of the endowment life assurance policy, the basic sum assured is paid out along with the annual bonuses and a terminal bonus (if applicable).

Cashing in low cost endowment life assurance

Low cost endowment life assurance policies can be cashed in before their termination date. This is sometimes referred to as "surrendering" a policy. The policyholder of the endowment life assurance will then receive the surrender value which is determined by the life insurance company. This value depends on the length of the policy which would have remained and how much has been paid in to that policy.