What is Endowment Assurance?

The insurance industry is full of jargon, so the following are some commonly used terms to describe the types of Life cover with a savings/investment element that are available as Endowment Assurance or Maximum Investment Plans or Regular Premium Savings Plans or Single Premium Life Assurance Investment or Insurance Bond.

Whilst the Financial Services Authority (FSA) distinguishes the various Endowment Assurance products available as Life assurance investments the definitions used here are as those determined by the CII (Chartered Insurance Institute).

Generally endowment assurance is a way of mitigating or reducing the financial effects of a terminal life event relating to your, your partner’s or family’s life.  Should you survive the maturity date of the policy, then a lump sum is paid out to you instead.

Death is a terminal life event covered by Endowment Assurance policies such as Non-Profit Endowments, With-Profit Endowments and Unit-Linked Endowments.

An adverse life event covered by Health Insurance is typically accident and sickness, critical illness or terminal illness.

Depending on the type of endowment assurance policy taken out by you or on your behalf, a payment will be made as a lump sum to the beneficiaries of the policy in the event of a claim being made on your death or to you on the maturity or expiry date, whichever occurs the sooner.

 

What are the types of Endowment Assurance?

The following are the types of endowment assurance available:-

  • Non-Profits Endowment pays out a fixed guaranteed lump sum to your beneficiaries on your death within the term of the policy or to you on reaching the maturity date, which ever is the sooner. These policies are generally no longer available.
  • With-Profits Endowment pays out a lump sum to your beneficiaries on your death within the term of the policy or to you on reaching the maturity date, which ever is the sooner. With-profits are permanent policies because they will at some stage pay out and provide benefits which are indirectly affected by investment performance.
  • Unit-Linked Endowment pays out a lump sum to your beneficiaries on your death within the term of the policy or to you on reaching a maturity date, whichever is the sooner. Unit-Linked are permanent policies because they will at some stage pay out and where the link with investment performance is direct.

 

Why should I take out Endowment Assurance?

There are a number of factors about an individual’s personal circumstances that will determine which of the types of whole of life assurance that may be applicable are based on their suitability, affordability and as there is an element of investment involved, the level of risk you are prepared to take.

 

How should I take out Endowment Assurance policy?

The first and most important step after you have decided you may have a need for endowment assurance cover is to have a discussion with us to provide you with independent financial advice.

Once we have agreed what the most suitable type of endowment assurance policy is for your particular circumstances we make an application on your behalf to take out a protection and investment policy based on how much you can afford and the amount of cover required, and as there is an investment element involved the acceptable level of risk you are prepared to take to match your needs.

 

How do I pay for Endowment Assurance?

Once the amount of benefit you require has been determined your monthly payment or lump sum premium for protection and investment under the policy or cover will be offered to you by the insurer’s underwriter after they have reviewed a completed personal questionnaire relating to your occupation and lifestyle including in some cases a medical report.

The premiums will be reviewable every one, three, five or ten years depending on the insurance provider i.e. the insurance company underwriting the policy.

 

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the articles by accessing Directgov at the following website  http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/Insurance/index.htm?cids=Google_PPC&cre=Money

and the Financial Service Authority (FSA) consumer guide available on their website at http://www.moneymadeclear.fsa.gov.uk/products/investments/types/pooled/life_assurance_investments.html