If an insurance event occurs, the company covers all costs of recovery, rehabilitation, etc. Such cases do not always happen, and in most cases people essentially give money for a feeling of security.
In order to obtain both insurance coverage and earn money in the long term, there is combined insurance: investment insurance (ULI) and endowment insurance.
What is the difference between endowment and investment life insurance?
Investment life insurance (ILI) is when you give the insurance company money (usually one time) and choose which stocks or bonds to buy with it. The client is usually offered ready-made investment kits - an investment strategy. In return, you receive insurance, but if the insured event does not occur, the company returns you the full cost of the policy plus interest depending on securities’ investment return.
Investment life insurance contract is concluded for a period of 3–10 years in average.
Using an endowment life insurance program you give the insurance company money once or every month, just like with regular insurance. In fact, with these funds the company buys securities (most often bonds) at its discretion. The client determines the size of monthly premiums independently.
When concluding an endowment agreement, you will not learn about the company’s investment strategy or its commission fees; only your guaranteed annual return will be indicated there. It is 2% after deduction of insurance commission fee, but it is possible to get more based on the results of the company’s activities. There are other programs with a higher return.
Endowment life insurance agreement is concluded for a period of 5–40 years.
Endowment is considered a more reliable way of investing, since the insurance company works with bonds and can guarantee you a stable return.
With ILI, the return is much higher, since you choose an investment strategy.
Terms of policy issue
Endowment life insurance policy is issued by banks or insurance companies. The main point is to choose a reliable insurer with a valid license.
Life insurance policies are eligible for tax deductions.
It is possible to assign payment under endowment policy for yourself or for another person. If the insured person passes, the company will immediately transfer the money to the beneficiary (specified in the contract; any person, including a relative can be assigned). But if the successor is not specified, in the event of the insured’s death, the money will be received by the heirs within six months according to the standard procedure for entering into an inheritance.
Keep in mind: if you miss even one regular payment, the company may terminate the contract and you will lose money.
Who is endowment insurance suitable for?
Endowment insurance is worth using if you want to combine business with pleasure: get both insurance and investments in one product. Endowment is also suitable for people whose work involves increased danger.
Source: https://www.whitecoatinvestor.com/invest-life-insurance-benefits/
Photos are from open sources.
