What is the primary purpose of an endowment policy?

The primary purpose of an endowment policy is to offer a specific amount of money at a specific future date. These types of policies combine life insurance with a savings component. They are designed to pay out a lump sum either upon the death of the insured during the policy term or at the end of a specified period if the insured survives. This structured payment provides financial security for beneficiaries, or can serve as a savings mechanism for a designated purpose, such as funding a child’s education or achieving a financial goal at maturity.

The nature of an endowment policy makes it distinct from other forms of insurance. While it does feature a death benefit, its main objective is the assurance of a payout at a given time, which can be crucial for financial planning purposes.