Endowment Insurance
The most usual combination in which pure endowments figure is technically
known as endowment insurance. This policy is popularly referred to as an
endowment. It promises to pay a certain sum to the insured in case he should
die within the term of the policy or a like sum at the end of the term in
case of survival. Analysis of this contract shows that it includes the pureendowment
feature just discussed and, in addition, insurance against death during
the term of the endowment. For illustration, a fiveyear endowmentinsurance
policy issued at age 45 will pay the sum insured if the policyholder die
during the first, the second, the third, the fourth, or the fifth years,
and it will pay the same sum if he survive the fifth year. The cost of this
insurance, therefore, will equal the following:
Contracts known as "semiendowments" or "double endowments" are sometimes
issued. They differ from the policy just explained only in the fact that
the amount due in case the insured should survive the term of the policy
(i.e. the endowment element) is onehalf, or is double, the amount paid
in event of maturity by death. The cost of a fiveyear semiendowment insurance
of $1,000 at age 45, therefore, would differ from the cost of the policy
just computed only by the cost of the pure endowment, which in this case
would be as follows:
69894/74173 X 500 X .862609 = $405.899442.
This amount, added to the cost of the fiveyears' term insurance, would
give the net single premium for the semiendowment.
