Legal Definitions - endowment policy

An endowment policy is a type of life insurance policy that pays out a lump sum of money either at the end of a specified period or upon the death of the insured person, whichever comes first. This policy is different from a regular life insurance policy because it has a savings component that builds up over time, in addition to providing a death benefit.

For example, if a person purchases a 20-year endowment policy and survives the entire 20-year period, they will receive a lump sum payout at the end of the policy term. If the person dies before the end of the 20-year period, their beneficiaries will receive the death benefit.

Endowment policies are often used as a savings tool for long-term financial goals, such as paying for a child's education or funding a retirement. They can also be used as a form of life insurance to provide financial security for loved ones in the event of the insured person's death.