THE ENDOWMENT POLICY
The Endowment Policy is said to be the commonest life insurance savings plan in Nigeria. The basic purpose of the policy is to provide a good investment return on premium invested as well as life cover over a specified period of time.
To invest in an endowment plan is to invest in a life insurance policy that provides you with both an insurance cover and a savings plan. A win-win situation I must say. It should be noted that the term “endowment” here, stands for the guaranteed payout the insured is entitled to when a policy matures.
A few of the reasons why one may choose to invest in an endowment policy includes:
- Saving towards retirement (to purchase a house or take a lavish vacation)
- Saving for capital to start a new venture
- Saving to fund your children’s education. e.t.c
The term Pure Endowment comes into play when discussing the endowment policy in Nigeria. The pure endowment plan was used mainly to invest employee contributions under the old pension regime in Nigeria. Now, following the Pension reform Act of 2004, this plan is rarely used. The pure endowment does not provide any life cover. It simply pays the maturity value at the specified date (if life assured is alive). On death before the maturity date the premium paid are refundable with interest.
Do well to research more about the endowment policy in your country. You can also get the Insurance Agency Certification Training Manual by the College of Insurance and Financial Management to learn more about insurance.
Please leave a comment if you can and follow our social media pages for more deets about insurance.
Follow us on Twitter, Instagram & Facebook: @rifanonline
See you in our next blog post!