What is an endowment in terms of life insurance?

An endowment in life insurance refers to a policy that combines both a savings component and a death benefit feature. This means that the policy not only offers financial protection to beneficiaries in the event of the insured's death but also accumulates cash value over time, which can be accessed or paid out at the end of the policy term if the insured is still alive.

This dual functionality distinguishes an endowment from standard life insurance policies that strictly provide a death benefit without an investment or savings element. Therefore, this type of policy is particularly beneficial for individuals seeking to save for a specific goal, such as funding children's education or planning for retirement, while also ensuring that their family is financially protected.

This structure allows policyholders to have both immediate security and long-term financial benefits, making it a versatile option within life insurance.