In the following article we look at the endowment life insurance policy, what does it mean, how does it work and how it can differ to other life insurance products.

Have you ever realized that ones you have purchased a life insurance, you are simply transferring the risk of loss or your death to the insurance company? When the company has a life insurance coverage under your name, it spreads the amount or costs of expected losses to many people. As a matter of fact, only a small percentage of the insured individuals suffer from loss. Now, in order for this insurance to be taken, a contract is usually made between the insurer, an agent and the applicant. Usually, it is the agent who will explain the contract to the applicant.

Under the terms stated in the contract, the insurance company promises to pay a certain amount of death benefit to a beneficiary which is usually designated by the diseased member. If in case everything has already been approved by the underwriter, you will eventually become the owner of the policy.

Now, to determine whether you need a life insurance or not, you have to ask yourself the following questions:

• Does any member of your family depend on your income?
• Do you have upcoming events that you need to plan for like mortgage pay off, college education, or funeral expenses?
• Are you only seeking for an investment or you just need a temporary program in the event that something is going to happen to you in the future?
• Do you have enough income to get that insurance plan?

The truth is, there are many types of insurance out there and they usually vary how much you can afford to make your payments and objectives. How do you assess yourself: risky or not? And if your riskiness is gauged, it will be done by means of underwriting and they usually base it on your assessed standards. Do you need a temporary plan or a permanent protection?

Generally, this is called a endowment life insurance policy which provides a permanent amount of money which is also called face amount or death benefit.  This benefit is usually received by your beneficiaries in the event of your death even before the maturity of your policy. Or in other circumstance, the insurance company will have to pay you in case you live when the insurance policy pays out or endows.

This is practically the same as the whole life insurance except for the following: if it is used before the endowment period, the insurance ends, and the face value becomes a living benefit. Other area where they differ to one another is the maturity period. A whole life insurance usually matures at the age of 100. The endowment’s premiums can be paid before the final date or in a lump sum. The cash value grows up fast since it is intended to be used wile the insured is still alive.