By concluding an endowment life insurance contract, the client thereby insures his life and health against events that cannot be predicted, such as a sudden and serious illness, accidents, death, and saves up money along with that.
In case of insured event occurrence, the insurer pays the client not only the accumulated amount but also interest from his funds’ investment. In the event of the client’s death, his money is paid to the beneficiary indicated by him in the contract.
Thus, the possibility to save up money for the future while having insurance coverage and insurance benefit guarantee are some of the endowment life insurance advantages; there are others as well. For example, the insurance premium and benefit are not taxed if the agreement is valid for more than 3 years.
The agreement with an insurance organization can be concluded for any period, which is very convenient when compared with a bank deposit agreement. But unlike deposits, life insurance contracts are not guaranteed by the Insurance Payments Guarantee Fund, that is, the client when purchasing an endowment life insurance policy should take this risk into account. Keep in mind that in case of early termination of the contract, the paid insurance premiums are not refunded or returned in a smaller amount by the company. The invested funds minus expenses not exceeding twenty percent of the received amount of insurance premiums can be returned only in the period from the 14th to the 30th day after the agreement conclusion and only on the condition of insured event nonoccurrence.
What is the difference between endowment and term life insurance?
In the case of term life insurance, the insurance coverage is paid by the company if, for example, the insured person is injured or deceased. However, if nothing happens to the policyholder before the contract expiration, he will not receive anything from the insurer. The size of premium in term insurance also differs from the one in endowment; it can be lower up to 10 times.
With endowment life insurance, the client receives the entire amount in a guaranteed volume; its size is fixed in the contract. When the contract expires, the policyholder is paid the accumulated amount with interest.
Let's take an example: suppose you have an endowment life insurance agreement for 20 years. The annual premium to the insurance company is 100,000 tenge. You can receive 2,000,000 tenge and accrued interest after 20 years.
For comparison, let's say you prefer term life insurance, and you pay the insurer a premium of 150,000 tenge every year. In 20 years, however, the insurance company will not pay you anything if unexpected and unfavorable events do not happen to you by the end of the contract. If the insured event, nevertheless, occurs, you or your family will be paid the amount specified in the insurance contract.
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