Endowment Life Insurance: A Basic Guide Although there are many options surrounding insurance policies, you may wish to consider taking out endowment life insurance. This option is slightly different from many standard life insurance policies, in that you receive funds whether you live or die. In some respect, an endowment life insurance policy can be likened to a term life insurance policy. That is to say, that it will be limited to a specific amount of time, generally 20 or 30 years. The difference is that an endowment life policy will pay out whether you pass on during this period or not. It is a win-win situation as you will receive the cash if you live out the years until the policy expires. The term life insurance option does not pay out if you reach the end of the time alive. Another advantage of an endowment life insurance plan is that you can decide to cash it in before the policy expires. This commonly means that you will receive less money than you would have done if you let it mature, but you can receive the money back at a time that you most need to use it. For instance, if you cash in a policy after 15 years and it is due to run for another five, then you are likely to receive approximately half of the total that would have been paid out at the end of the policy. The exact amount of money you receive if you cash in will depend on the arrangements you have made with the insurer. The major drawback of this type of insurance is that you are likely to have to pay a high premium than you would with any other kind. It is possible to get around this by getting a low cost endowment policy. This does mean lower premiums; however, the amount that will be paid out will decrease over time. Alternatively, you could choose to get a return of premium life insurance policy. This is a fairly new insurance product but is designed to give you the best of both worlds. It is set for a specific period of time like other insurance products and you pay a set amount each month. If you die within the period, your beneficiary will receive the death benefit. The main difference with this policy type is that you will also receive your premiums back in full if you are still living one the policy ends. The premiums are free of income tax and so the amount you get paid will be the same amount as you paid in over the course of the plan. Return of premium policies can also be cancelled early. This will result in you getting back a partial amount of what you paid in but not all of it. The main benefit of this policy is that you are covered if you do die and covered if you don't. When you apply for life insurance there are several elements that determine the amount of premium that you will pay to the insurer. One of these elements is your age; it is likely the older you are, the higher the premium amount you pay. This is why it pays to take out life insurance when you are younger. Secondly, factors such as being a smoker can mean that you will pay more each month. Non-smokers tend to receive lower premiums because they are keeping themselves in good health. All the information you need about endowment life insurance policies or return of premium plans can be found by contacting a financial expert of an insurer directly. Remember to ask all the questions you need to make sure you have all the necessary information to make an informed decision. If you have made up your mind which insurance policy is best for you, many providers have websites where you can fill in a form very quickly and easily.
