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What is Endowment Insurance?
This is simply a type of insurance policy that provides protection against the death of the policy holder that also includes a long term financial investment. The second part of the description is what differentiates endowment insurance from a vanilla life cover policy.
There are a number of different options available and whilst they all do the same thing, they do it in a slightly different way. The main differences tend to be about the way that your investment portion is used, which basically means is it placed to gain a higher yield with more risk or is it placed to gain a lower yield with less risk but less upside?
Unit Linked Endowment Insurance
This is a popular type of plan where the meat of the premiums are placed in much larger index funds. The total amount invested in these funds is broken down into smaller units and each investment is accredited with an appropriate proportion of units. There are cash-in fees associated with these policies and they can be quite high as a proportion of a modest insurance policy.
Endowment Insurance with Profits
With these types of policy there is a guaranteed lump sum, often tax free, that can be referred to as the sum assured total. However, over the life of the policy the sum assured can increase as the invested premiums increase and the total grows. Of course, if market conditions are not kind the total can fall away and it is possible that the total amount of the investment is lower than the combined premiums paid into the policy by the policyholder.
Companies That Offer Plans and Getting a Good Deal
If you are in the market for a new policy you are probably have more time than you think and conversely it takes less time than you think to actually shop around and try to make sure you get the most appropriate policy. We recommend you take time to research the most appropriate plan first and only then speak to brokers and insurance companies to get the lowest possible price. This is best practice because you will know what is the right policy for you and secondly you will actually be in a position to buy which means you can genuinely negotiate with the intent to follow through.
Yes you did read that last paragraph right. You can negotiate with brokers, IFAs, and insurance companies to get the lowest monthly premium. We have seen individuals and businesses lower theirs by 30%. If you are not an experienced negotiator at the very least you need to question your quote and ask “What is your best possible price?”, then pause and let the salesperson speak next.
Main Benefits of Endowment Life Insurance
Choosing the right life insurance policy can be a mind boggling as you try and compare the small print of rival policies. From benefits to returns, rates to maturity period, these insurances can take a heavy toll on the life they are promising to secure. But what if a policy offered the security of life insurance along with the protection of a savings plan? This is not merely wishful thinking but reality in the form of an endowment life insurance policy.
This policy ensures that the client will receive a fixed sum of money after a specific time, whereas term life cover only pays if the policyholder has died during the term. In simpler terms, whether you outlive the policy term or not, either you or your beneficiary will receive the guaranteed sum of money after the time period elapses. So naturally it offers security for those you leave behind as well as guarantees good returns quite unlike general life insurances. Also, as it is an endowment it has very high cash value and hence the returns are superb. When it comes to financial security, one can never be too sure. These types of policy not only provide a safety net for your loved ones but they are also a great way to build up capital. Many people find this an easy way to save and help prepare for the future.
Those wishing to help others can use this policy for their charitable purposes as well. You can name an orphanage or hospital as your beneficiary and ensure that they benefit even after you’re gone. In fact its multi-faceted features go way further than that, with return profits so high, a smart investor can use this policy to his benefit in several ways. Endowment life cover can be used for mortgage payments, it can be extended to cover critical illnesses and it can also be a means to get by during a phase of unemployment. So don’t get lost in the maze of policies, find your way out by picking the one that benefits you and more importantly, your loved ones and family.
Endowment Insurance Videos
This is a nice and short video talking about a new policy. Well worth a watch, if only because of the clear advice.
Perhaps not as useful as the previous video, here is an explanation of how to choose the policy expiry date.
If you have any questions, or found this guide useful, please do get in touch and let us know. We will try and get the best possible answer and pride ourselves in answering every single question. Feel free to contact us.
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