What is one characteristic of endowment insurance compared to life insurance?

Endowment insurance is distinct from traditional life insurance primarily through its approach to providing both a death benefit and a cash value accumulation component. One key characteristic is that endowment policies are designed to pay a lump sum (the face value) to the policyholder either upon reaching a specified maturity age or in the event of their death, whichever comes first. This dual benefit serves as a savings vehicle as well, allowing policyholders to accumulate cash value that can be accessed during their lifetime.

This cash value grows over time, making endowment insurance an appealing option for individuals looking to save for specific future needs while still maintaining life coverage. The lump sum payment at the end of the specified term is often utilized for significant financial goals, such as funding education or retirement.

The other options do not fully encapsulate what endowment insurance offers compared to standard life insurance. Lower premiums are typically associated with less comprehensive coverage, which isn’t a defining feature of endowment policies. Flexibility in coverage is generally considered a drawback of endowment insurance since the terms are more rigid compared to universal life or whole life policies that allow for greater alteration in premiums and death benefits. Lastly, endowment policies do have a shorter coverage term compared to whole life insurance, but the defining characteristic lies