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What Does Pure Endowment Mean?

Updated On Aug 27, 2021

Many insurance professionals advise purchasing an endowment policy in addition to a conventional term insurance policy or any other type of life insurance with a death benefit. While the other policy may assist you to protect your family's financial future, a pure endowment policy can let you set aside a little amount of money on a regular basis for your long-term financial goals.

These strategies also assist you in becoming diligent with your savings. The money you get at the conclusion of the policy's term can be utilized for a variety of things, including paying for your child's education, marriage, or even prepaying your mortgage.

Everything About Pure Endowment Plans

Following are few things one must know regarding Pure Endowment plans:

  • Certain Amount Is Insured

A pure endowment is a form of life insurance policy in which the insurer agrees to pay the insured a set sum of money if the insured is still alive at the end of the plan. Typically, these payments are made in one big sum.

  • No Beneficiaries

A pure endowment, unlike a regular life insurance policy, has no beneficiaries, which means the insurance company will not pay out any benefits if the insured does not live to the end of the policy period.

  • Payment Of A Premium

In order to get a reimbursement from the insurance company, the insured must continue to pay premiums and live through the policy's set expiration date. As a result, this isn't a legitimate life insurance policy.

  • Typically Illegal

As a result, unless paired with some type of traditional life insurance policy that pays out to beneficiaries when the insured dies, pure endowment policies are often unlawful under your jurisdiction's life insurance legislation. In the most usual case, a pure endowment policy is combined with some form of term insurance. If the insured outlives the policy's defined term, they will receive some money back typically an amount equal to what they paid in premiums. Pure endowment assurance is another term for a pure endowment.

  • Savings

There is no saving aspect in the former, whereas there is one in the latter. In the case of a Pure Insurance policy, you pay the premium for a specific term (usually not more than 35 years) and the Nominee will be paid the Insurance amount if anything happens during that time. If you make it to the conclusion of the term, you will receive nothing. There is a variation in which you pay a greater premium and receive your premium back if you survive.

  • Maturity

If you live to maturity, you will get the sum insured, as well as any collected bonuses and, in some situations, a one-time bonus. Though the Endowment policy appears to be favourable in terms of return, you only get roughly 5% every year. Your insurance coverage is quite limited when compared to a Pure Insurance Policy, which provides a high level of coverage for a fraction of the cost of an Endowment Policy.


The pure endowment policy will only develop for payment if the insured individual lives to the completion of the endowment period; alternatively, the insurance company would not reimburse the insured sum.

Also Read: 

How To Invest In Endowment Plans To Fulfill Your Financial Goals?

Who Should Buy An Endowment Policy?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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