What typically characterizes an endowment policy?

An endowment policy is characterized by the payment of proceeds either at specified ages or upon the death of the insured before reaching those ages. This type of policy combines life insurance with a savings element, where the policyholder is guaranteed to receive a benefit after a set term or at death, whichever occurs first.

Because endowment policies have a defined maturity date, they reward the policyholder if they live to that age, making them suitable for goals such as funding education or retirement. The combination of both life coverage and an investment component is what distinguishes endowment policies from other types of insurance policies, such as term life insurance, which only provides a death benefit without accumulating any cash value.

This structure allows policyholders to have a clear understanding of when they will receive benefits and for what reasons, making it appealing for long-term financial planning.