Endowment in Life Insurance
The maturity of a life insurance policy while the insured is still living, causing the policy's stated benefit to become payable to the policyowner.
What does Endowment in Life Insurance mean in insurance?
Traditional endowment policies pay a benefit at death or at a stated maturity date, whichever happens first. On licensing exams, endowment is also discussed when a permanent life policy reaches its contractual maturity age and the cash value equals the face amount.
Exam-ready definition
A policy endows when its cash value reaches the face amount and becomes payable while the insured is alive.
Example
If a policy matures at the contractual maturity age while the insured is living, the maturity benefit is paid to the policyowner.
Common misconception
An endowment payment is not a death benefit because the insured is alive when the policy matures.
Sample insurance exam question
What happens when a traditional whole life policy endows at its contractual maturity age?
Show answer
The face amount becomes payable to the living policyowner, subject to the policy terms.
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