ENDOWMENT INSURANCE Meaning and
Definition
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Endowment insurance is a type of life insurance policy that combines elements of both insurance coverage and investment. It is designed to provide a lump sum payout at the end of a specified period, either upon the death of the insured or upon maturity of the policy. This payout is known as the endowment or maturity benefit.
Under an endowment insurance policy, the insured pays regular premiums for a specific period, typically between 10 and 30 years. A portion of these premiums is allocated towards covering the risk of premature death, which ensures the policyholder's beneficiaries receive a death benefit if the insured dies during the policy term. Additionally, another portion of the premiums goes towards building up a cash value component, which grows over time due to investment gains and accumulates until the policy matures.
At the end of the policy term, the insured receives the maturity benefit, which can be a predetermined lump sum or as periodic payments. This payout can be utilized for various purposes such as funding education, retirement, or any other financial goals. It provides a form of forced savings and financial security for the policyholder and their family.
Endowment insurance policies often come with higher premium costs compared to other types of life insurance policies due to the investment component. However, they offer the dual benefits of life coverage and a savings plan, making them suitable for individuals seeking both protection and long-term savings.
Common Misspellings for ENDOWMENT INSURANCE
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Etymology of ENDOWMENT INSURANCE
The word "endowment insurance" can be broken down into two parts: "endowment" and "insurance".
1. Endowment: The term "endowment" originated from the Latin word "indominum", which means "to provide" or "to equip". In English, it first appeared in the early 15th century and referred to the act of giving financial resources or property to an institution or individual to support their endeavors.
2. Insurance: The word "insurance" traces its roots back to the Latin word "securus", which means "security" or "safety". In the 17th century, it evolved from the Old French term "ensurer" and started to signify the concept of protecting against loss or harm through a contract.
