Endowment insurance is a life insurance policy that pays full amount assured to the beneficiaries if the insured happens to die in the long run or if the insured lives up to the maturity of the policy.
It is basically a life insurance policy and it enables the insured to have a good amount of money if he or she lives to the maturity of the policy hence can serve as saving project to the insured.
Pros of Endowment Insurance
- There are returns
When the insured dies, the beneficiaries are paid the money the insured had put in the company and in case the insured lives to maturity of the policy then he or she will be able to enjoy the benefits as the money will be given back to him or her.
- It enables the insured to save
When the insured lives up to the maturity of the policy, then he or she will be given the money and she may end up using it in an investment project hence enjoying the benefit of the savings.
- The money can be used to improve the economy
The money that is paid by the insured can be used by the company to invest in trade and other industries hence the economy of the country improving.
The insured can take loans from the insurance company depending on the amount he pays as premiums hence using the money to invest in other sectors which will be advantageous to the insured. The insured can also be given some loans in case of emergency hence not really struggling with the issue of an emergency.
- Protection of finances
The insured will be at peace knowing that his finances are protected and in case the company faces an issue then it will work hard to pay back the money to the insured.
Cons of Endowment Insurance
- It requires a long commitment period
As one may not really know for how long he or she may live, then it requires the insured to commit himself or herself for a long time before he can enjoy the benefits or the benefits to be given to the beneficiaries.
- Low returns
The insured or the beneficiaries are bound to get a low amount of money as compared to the amount that was invested in the company hence it is a loss to the insured or the beneficiaries.
- Higher premiums
The premiums paid in endowment policy are relatively high and this makes it hard for many people to choose this kind of insurance policy.
- The risks are not shared
This is because with endowment policy the minimum period that someone needs to pay the premiums is about thirty years and this is a very long period hence it is not easy for someone to benefit from the plan.
An endowment policy is not really preferred by many unless one has a very low-risk appetite and is not looking into the growth of the investment. This is because the minimum period that the insured has to pay premiums is very long.