What is endowment insurance? The terminology of saving through insurance
Saving through insurance is suitable for both experienced investors and those just starting to save. Learning about the most common terms related to saving through insurance is a good way to familiarise yourself with this form of saving and investing.
Endowment insurance refers to an insurance contract which involves the appointment of a beneficiary for both the savings and the death benefit. Within one insurance contract, you can invest in various funds and investment baskets and raise the value of your endowment insurance.
Unit-linked endowment insurance is also often called an endowment policy. However, endowment policy and endowment insurance usually refer to the same thing. When comparing products, it’s advisable to pay close attention and ensure the product you choose has exactly the right features for your needs.
Life insurance is included in endowment insurance
If you die while the endowment insurance is valid, the beneficiary you have appointed will receive your savings. In the event of your death, the amount you have saved will already be paid to the beneficiary of your choice before the estate inventory and settlement of the estate. The beneficiary could be a friend or family member, or an association.
Insurance wrapper provides benefits when switching investment products
When we discuss insurance savings products such as endowment insurance, we often speak of an insurance wrapper. An insurance wrapper means that the insurance forms a wrapper for different investment products. Insurance savers can thus diversify their savings into many different investment products using a single insurance contract.
The endowment insurance provides benefits in taxation because you do not pay tax on the investments’ return when you switch investment products within the insurance wrapper. Taxation for endowment insurance or unit-linked insurance takes place only when you withdraw your savings from the insurance wrapper.