Endowment vs. Whole Life Insurance
Both Endowment and Whole Life Insurance are types of insurance which cover mortality coverage with saving component. The periodic installments (monthly or yearly) are divided into two parts: one goes directly to cover insurance, while the second part is invested in order to build "cash value".
An endowment is a life insurance with a quite short coverage period (usually in 10 to 20 years or when the insured reaches a certain age) and thus and mature sooner than whole life insurance. In case of endowment the benefits are paid at the time of death of insured or endowment expiration. In this second case, if the insured is still alive at the time of an endowment's maturity, the face value returns to the policyholder.
Whole life insurance is designed to cover the individual death and encourage him to savings. Death benefits are paid on death (in full) up to age 100 or 120.
If the insured lives longer than the period covered by the particular insurance, the cash value is paid out to the insured. In some cases, when the contract allows, the part of the money which has been invested can also be used to borrow money against. The part of installments which are invested may generate earnings, which (depending on the country's policy) can be tax-deferred if the insurance policy is cashed in during the life of the insured.
So, in summary:
Both Endowment and Whole Life Insurance are types of insurance which cover mortality coverage with saving component. Endowment policy covers relatively short period and thus its main aim is to provide financial security for beneficiaries. Whole life insurance covers long period and is primarily used to provide beneficiaries with financial support following the insured's death.
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