International Styles

Definition and Types of Policies

All the policies discussed in the three preceding chapters provide for the payment of the full amount of the policy only in the event of death. Endowment policies, on the contrary, provide not only for the payment of the face of the policy upon the death of the insured during a fixed term of years, but also for the payment of the full amount at the end of said term if the insured be living. Whereas policies payable only in the event of death are essentially taken out for the benefit of others, endowment policies, although affording protection to others against the death of the insured during the fixed term, usually revert to the insured if he survive the endowment period. Such policies, therefore, have become popular in recent years as a convenient means of accumulating a fund which will afterwards become available for the use of the policy-holder.

An examination of the contracts issued by different companies shows many variations in the use of the endowment-insurance principle. Such policies may be made payable in ten, fifteen, twenty, twenty-five, thirty or more years, or the length of the term may be so arranged as to cause the policy to mature at certain ages, such as 60, 65, 70, etc. When written for such terms the purpose of the policy usually is to combine immediate protection with saving; while if written for long terms or to mature at an advanced age the object is usually to combine protection with old-age provision. Usually the contracts are paid for by premiums (payable annually, semi-annually or quarterly) continuing throughout the term, but if desired the premiums may be paid on the limited-payment plan, as, for example, a thirty-year endowment paid-up in twenty years.

Other applications of the endowment principle have already been referred to in the chapter on "Classification Of Policies", but may again briefly be recapitulated. Thus there may be "double endowments" or "semi-endowments", the first meaning that the amount payable upon survival is twice that paid in the event of death, and the last meaning that the sum payable upon survival is only half as large as the amount promised upon death. Various kinds of "child endowment policies" are also issued by certain companies. Sometimes these policies, besides guaranteeing the payment of a fixed amount upon the attainment by the child of a specified age, also provide for the return in full of the premiums paid in the event of the child's death before reaching the endowment age. Or, the policy may be issued without the return of premium privilege in the event of the child's death, the only benefit under the policy in this instance being the amount payable on survival. Sometimes it is provided that upon the death of the purchaser of the policy, usually the father, premium payments shall cease, the policy becoming full-paid and the principal becoming due when the child reaches the endowment age. In still other instances the policy may be issued on a child's life at an early age, say at age five, the understanding being that the policy will not come into full force until the insured reaches a specified age (say age 21) and will then mature as an endowment at, say, age 50. These policies, furthermore, may again be issued with or without the return-premium privilege.




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