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Endowment Life Insurance Explained

If you have someone that depends on you financially, like a partner or children, then you need some life insurance to provide for them if you weren’t around to provide for them financially. However you will need to decide which type of life insurance you need and this will depend on your personal circumstances. The most common types of life insurance are whole of life and term insurance.

What is Endowment life insurance?

Endowment life insurance policies are life insurance policies with a savings plan attached. Endowment life insurance policies are normally sold alongside mortgages and will pay out any returns at the end of the policy term, or a lump sum when the policyholder dies. Endowment life insurance gives life insurance protection and some investment value when the policy ends.

You will pay more for an endowment life insurance policy, but not only will they pay out a lump sum to your family when you die, if you don’t die while the policy is in place, you will receive the value of the policy as a lump sum. However endowment life insurance policies should not be used as a way of saving money as there are normally much better alternatives available.

Types of Endowment Life Insurance

When you buy an endowment life insurance policy you can choose if it is a with profits policy, or not. A with profits policy gives you bonus payments each year based on the profits of the company. As a result these bonus payments vary each year, but can’t be taken back once they have been paid. If you don’t choose a with profits policy you don’t receive any bonus payments and will just receive the sum insured.

As with other life insurance policies you can choose to add optional extras to the policy. If you choose waiver of premium your life insurance premiums will be paid by the life company if you are off work for a set period because of illness or injury. Critical illness insurance pays out a lump sum if you are diagnosed with one of a list of life-threatening illnesses and can be added to life insurance policies. Not only will the policy pay out if you die it will also pay out if you get a critical illness.

How to Find the right Life Insurance Policy

Life insurance is complicated and it's essential that you choose the right policy. We specialise in life insurance and will search the market and help you find the right cover at the best price available. Quotes for life insurance are free and you are under no obligation. Compare leading insurance providers today!

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