Endowment Insurance

A guaranteed sum assured payable on death within, or at the end of a pre determined number of years (maturity). Premiums remain level throughout the term of the policy. The two main types of endowment policies are None Profit and With Profit however Unit Linked versions are also available.   

None Profit

This type of endowment guarantees to pay out the sum assured on death within the term or on maturity. This type of policy may be suitable to a person that wants a cast iron guarantee that a fixed amount of money (the sum assured) will be available at a specific future date or made available earlier in the event of their early death.    

With Profit

This type of endowment pays out a minimum guaranteed sum assured on death within the term or on maturity, plus any bonuses that are added to the sum assured as a result of part of the premium paid being invested into the life companies "With Profit" fund. The premiums paid for this type of policy could be higher or lower than with a none profit policy and this is determined by the amount of the guaranteed minimum sum assured and the amount targeted by the policy holder at maturity.  

When either policy has been in force for a while an encashment value will start to build up. The longer the policy remains in force the better the encashment value will be. Early encashment of such a policy should be only considered as a last resort because the policy would qualify for a final bonus on maturity which could be considerable in size. As well as losing the final bonus early encashment would also attract early encashment penalties.

This type of policy may be suitable to a person that requires a guaranteed minimum amount of money (the sum assured) available in the event of early death however they would like the sum assured to increase over time.

Unit Linked

This type of endowment policy would pay a guaranteed minimum sum assured on death within the term. Part of the premium paid would be invested into unit-linked funds (stock market related) run by the life company or by external fund managers. This type of policy may be suitable to a person that requires a guaranteed minimum amount of money (the sum assured) available in the event of early death but also seeks growth potential via stock market association in order to enhance the maturity value at the end of the selected term.  

Maintaining the policy until the end of the selected investment term will allow the full value of the investment proceeds to be paid out without early encashment penalties being applied.