Glossary

Endowment policy

Also called savings plan, endowment plan.

Life cover combined with a contractual payout at maturity, whether or not a claim is made.

An endowment policy pays a sum on death during the term, and also pays a maturity amount if you survive to the end. The premium is doing two jobs, so for the same outlay the life cover is much smaller than a term plan would give you.

The returns are contractual rather than dependent on market performance, which is the trade people are making when they choose this over term cover plus separate savings.

Related terms

  • Term insurance Pure life cover for a fixed period. Pays out if you die during the term, and pays nothing if you outlive it.
  • Maturity benefit The amount payable if you survive to the end of the policy term.
  • Survival benefit A payment made at defined points during the term, provided the life assured is alive.

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