Is Endowment Life Insurance Right for You

There are many choices when it comes to taking out life insurance; one option you may want to investigate is endowment life insurance. This type of plan is slightly special in what it offers. Whereas normal life insurance plans only offer death benefit, this plan will pay money out whether you pass away or not.

An endowment life insurance policy bears comparison to a term life insurance plan. Both of these policy kinds are active for a certain period of time, normally between 10 and 30 years. Whereas a term insurance plan only pays out should you die during that period, an endowment policy will pay out whether you live or die. Once the policy is due to end, the insurer will pay out a lump sum for you to use if you are still living. No further payments are received from a term insurance policy after the death benefit has been paid.

It is also possible to cash in an endowment life insurance plan before it reaches maturity. Doing so will result in your receiving a bit less than you would have if you have kept it going, but it means that you can take the cash at a time when you need it the most. Take for example, the following scenario. You have a twenty year policy and decide to cash in the plan after 15 years. This means that you will receive approximately half of what you would have done if the plan was left for the twenty year period. The value that you get when you cash in a plan will depend upon the details of the agreement when it was signed.

The main disadvantage of this type of plan is that it ordinarily charges higher premiums than that of other life insurance policies. You can purchase a low cost endowment policy but although the premium is lower, the cash value generally deteriorates throughout the period of the plan.

Another viable option is to invest in a return of premium insurance plan. This is the new kid on the block but will prove popular with many people as it allows you to benefit in either circumstance. The policy follows the pattern of having a set period for the policy and you will pay the regular premiums to the insurer. If you pass away during this period, the insurer will pay out the money to the beneficiary named on the policy.

After the period has ended and you are still living, the insurer will pay back the premiums in full to you. The amount will be 100% of what you paid in as these payments are tax-free. If you decide to terminate the return of premium policy, then the insurer will pay back a partial amount of the money that you paid each month. With this insurance plan you can basically hedge your bets.

In order to get lower premiums you need to be aware of a few conditions that affect how much you will pay. The first of these is your age; you are likely to pay a higher premium if you take out insurance in later life. This is why it makes sense to take insurance out in your earlier years. The second point to remember is that smokers will pay more than non smokers, sometimes as much as 50% more.

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.