Endowment Assurance Plans

Most of the conventional insurance products of life insurers come under this title. They provide benefits in the form of combinations of Term assurance (death benefit) and Pure endowment (survival benefit). In other words endowment assurance plans provide death benefit as well as survival benefit. If the policyholder does not die during the term of the policy then he will get the assured benefit as maturity claim. If the policyholder dies during the term his beneficiaries receive the death claim.

Benefits under endowment type of plans could be enhanced by increasing the under lying benefits. For e.g. if you mix term assurance (TA) benefits and pure endowment (PE) benefits in 1:1 ratio you get a standard endowment Plan. If you enhance death benefit to two times (on death two sums assured are payable) the ratio of TA:PE will be 2:1. Similarly if death benefits are increased to three times the ratio becomes 3:1. Examples are Jeevan Mitra policies of the Life Insurance Corporation of India. Remember, as death benefits rise, the term assurance premiums too will rise and that is not refundable. Let us assume that keeping the death benefits as one sum assured an insurer increases the survival benefit to two sums assured, i.e.TA:PE = 1:2. That is on death one sum is payable whereas on maturity two sums assured are payable, e.g. Double endowment Plan of LIC.

Term of the Endowment Plan could be chosen to suit the convenience of the policyholder. There are provisions to pay single premium, limited period premium or premium payment during the entire term. Non-forfeiture regulations (see the Post on the topic, under the label 'Policy') are applicable to endowment assurance plans. We shall see some more Plans coming under the group of endowment plans in our coming Posts.

Key words:

Conventional insurance products

Endowment assurance

Non-forfeiture regulations

Jeevan mitra

Double endowment