Endowment Policy

Sam · Posted: Fri Jun 11, 2004 4:21 am Post subject: Endowment Policy

Endowment Policy is an 'investment vehicle' for interest only mortgage.It is a long term investment, which depends upon the stock market performance for its growth. Here the sum assured plus the total bonus is paid back to the policy holder, upon the completion of policy's term.

There are three types of endowment policies:

With-profit endowment policy.
Low cost Endowment policy.
Unit Linked Endowment policy.

Advantages of endowment policy are as following:

There is a guaranteed payment of endowment to the policy holder, upon the completion of policy's term.
Helps in reducing borrower's financial responsibility towards his/her family.
Gives back original 'sum assured plus the accumulated bonuses' to the borrower.

Disadvantages of endowment policy are as following:

It carries an inherent risk factor along with it.
It has high premium rates and low bonus rates.
Cost of an endowment policy is double that of whole life policy.

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