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Pavilion Insurance Endowment Life Insurance
Pavilion life insurance offers an endowment policy which is basically a life insurance contract designed to pay a lump sum after a specified term (on its maturity) or on death.
Typical maturities are ten, fifteen or twenty years up to a certain age limit.
Endowments can be cashed In early (or surrendered) and the holder then receives the surrender value determined by the insurance company depending on how long the policy has been running and how much premium has been paid.
There are various types of life insurance endowments that are offered.
Unit-linked endowment: these are investments where the premium is invested in the units of a unitised insurance fund. Units are encashed to cover the cost of life assurance. Policy holders can often choose which funds their premiums are invested in and in what proportion. Unit prices are published on regular basis and the encashment value of the policy is the current value of the units.
Full endowments: this is a with-profits endowment where the basic sum assured is equal to the death benefit at start of policy and assuming growth, the final pay-out will be much higher than the sum assured.
Low cost endowment: this is a medley of an endowment where an estimated future growth rate will meet a target amount and a decreasing life insurance element to ensure that the target amount is paid as a minimum if death occurs (or a critical illness is diagnosed if included) Traded endowments: they are otherwise known as second hand endowment policies (SHEPs). This enables buyers to buy unwanted endowment policies for more than the surrender value offered by the insurance company. The reason why investors pay more than the surrender value is because the policy has greater value if kept in force than if it is terminated early.
When a policy is sold, all beneficial rights on the policy are transferred to the new owner. The new owner takes on responsibility for future premium payments and collects the maturity value when the policy matures or the death benefit when the original life assured dies. Policyholders who sell their policies no longer benefit from the life cover and should consider whether to take out alternative cover.
The easiest way of determining whether an endowment policy is in this category is to check to see whether your policy document mentions units, indicating that it is a unitised with profits or unit linked policy. If bonuses are in sterling and there is no mention of units then it is probably a conventional with profits endowment policy.
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