Whole Life Assurance vs. Endowment Life Assurance Policies: Which One to Buy?

Whole life and Endowment life assurance are life assurance products that cater to varying needs.

Whole life provides coverage for those who need insurance protection for the entire duration of his life. It is considered a life assurance policy since the death benefit is guaranteed upon the death of the Insured and as long as he keeps the premium payments up to date. There are also cash benefits that the Insured may avail of like dividends (if the policy is a participating policy).

Meanwhile, an endowment life assurance policy is considered a life assurance product since the payout is guaranteed – whether the Insured outlives the policy or he dies within the coverage period. Endowment policies are shorter and only provide coverage for a defined number of years or up to a specified age.

Below is a table that outlines the differences between the two:

  Whole Life Endowment
Important factors to look into when buying the policy

Level of coverage, premiums, cash value, whether to get a participating or non-participating policy.

Level of benefits at maturity, investment rate, premiums, length and terms of coverage.

Need addressed
  • Need for protection to provide for an aging spouse or dependents
  • Need to pay for end of life expenses
  • Can be used as an estate planning tool to help heirs pay for inheritance taxes
  • Need for temporary insurance protection
  • Need for funds at a certain age (for retirement, a child’s education, etc.)
Payout

Death benefit paid out upon the Insured’s death, usually until the age of 100 (some up to 120).

Death benefit upon the Insured’s death within the coverage period or Maturity benefit upon the policy’s maturity.
Premiums

Premiums are paid usually up to the end of the policy but there are also options for limited pay whole life and single pay whole life.

Premiums to be paid throughout the life of the policy but may be more expensive than whole life since it has to be able to grow the funds to pay for the promised lump sum at the end of the policy.
Kinds of policy

You can choose between a participating or a non-participating policy. Participating policies pay dividends to the policy.

You can choose among unit-linked, with profit or low-cost endowments.

Advantages
  • More affordable premiums
  • Cash values can build up considerably as it has more time to do so
  • Predictable premiums
  • Faster build up of cash value due to limited premium payment period
  • Acts as insurance and “forced savings” account
Disadvantages

Interest rates may be more conservative as this is for the long term.

More expensive premiums.

To protect your loved ones for less, fill the form on the right to get your life insurance quote.