Endowment Insurance

This type of policy protects your family and saves for the future. It will provide Life Assurance protection should you die during the term of the policy, but should you survive to the end of the policy term then you may also receive a lump sum. This lump sum is known as the maturity value.

Premiums are paid for an agreed number of years, then at the end of this time you receive a lump sum. Depending on the type of policy, this will either be the sum insured together with bonuses (with-profits), or the amount of money invested together with the investment growth (unit-linked). If you die before the maturity date, the insurance company will either pay the sum insured, or the value of the policy, whichever is the greater.

Although more expensive than protection insurance alone, it will help your family's finances should you die, while at the same time allowing you to save.

Endowment policies can be issued on a with-profits or unit-linked basis.

With-profits

This is a pooled investment, where your premium is added to other premiums and invested by the insurance company in a wide range of assets. The investment growth is paid to you as regular and final bonuses and added to your policy.

The with-profits endowment policy is a means of regular long-term saving with a minimum of risk and the potential for a good return. However, there is no guarantee of the final value of the policy.

Unit-Linked Policies

With a unit-linked policy the insurance company invests your premiums in specific funds chosen by you. The amount payable under your policy depends on the value of the investments in those funds at the time your policy matures.

Although the potential benefit from a unit-linked policy can be greater than from a with-profits policy, there is also a risk that the eventual benefit could be lower. The value of investments can fall as well as rise.