Endowment Policies - Choosing the Right One

An endowment policy

is essentially a type of insurance bond, upon which you pay premiums - usually monthly - for a set term, for a hopefully large amount of money which can then earn interest the time of bond maturity. Exactly what, I am frequently asked; does an affordable endowment look like (for the general middle class, as opposed to the endowment policies espoused by institutions)? After all, in this current climate of life-insurance-popularity, why should I even consider an endowment plan? Well, one very good reason involves the very nature of the Term Life Insurance policy; the balance is paid out usually only in the event of your death. But what if you have a lot of years still left, and want to secure a bigger home, college tuition or otherwise more comfortable lifestyle today? Endowment plans are still the way to go in these scenarios. Let us consider a generic kind of endowment plan, and what it can do for the financial security of you and your loved ones:

1. Upon choosing an endowment policy term (the number of years you intend to pay monthly premiums until policy maturity and payout) of either 10 years, 15, 20, 25, or 30, you obtain precise knowledge of the savings amount, as well as, obviously, the date you can expect this paid. This enables precise planning.

2. Once you choose the term of your endowment plan, you then have precise knowledge of the basic yearly premium, as well as the premium payment term and several different options of the outright pay term. The premium payment option enables the endowment policy to be secured in monthly, quarterly, semi-annually, or annually. It need not be month-to-month.

3. Often, endowment policies can be modified for more specific considerations at the beginning of the term, such as for protection against potentially terminal illness, accidental death and disability, serious injury requiring surgery, and untimely death. Of course, the term payments will be a bit more for these.

Lastly, another benefit of endowment plans - some of them, anyway - is the release of the full amount in the event of the policy initiator's death, even if very soon after the endowment policy's establishment. Often, it doesn't matter if only a few months worth have been paid. More common, however, is the so-called endowment surrender value, which is a pre-agreed-upon figure - less than the whole, of course - that the endowment policy-holder will be paid upon early termination of premiums and the release of the adjusted policy amount.