Endowment Policy
What is an Endowment Policy?
An endowment policy is a life insurance policy designed to pay a fix sum after a certain term, unlike a traditional life insurance plan which does not pay anything after the duration of the term.
It can also be combined with CIC (critical illness cover) or IPI for additional coverage against unforeseen circumstances.
The most common form of cover in relation to mortgages are policies taken out in conjunction with interest only mortgages.
The LCE (Low Cost Endowment) policies are able to offer more value for money by reducing the amount of life insurance cover initially needed by the policy holder at the outset as there financial obligations, liabilities and debts are reduced over time.
This can lower the amount due in monthly payments over time keeping the policy very much affordable.
The popular favourite is the LCE in this respect however there are variations to respond to the individual desires of the policy holder - like the 'with-profit' policies where policy holders can make an additional profit upon the ‘maturity‘(a named used to define the end of the policy duration or ‘term‘ as it is correctly referred to) date.
These ‘with-profit’ endowments can also be sold to special companies for a profit but only before 'maturity' - the agreed expiry date - sometimes for up to 40% more than there ‘surrender value‘.
A ‘surrender value’ is how much the policy is worth before any time it is due to reach its end of term or maturity as often called.
