Endowment Policies have been around in Great Britain for more than 150 years as an attractive form of saving and building capital. Solid and reliable Life Insurance Companies with an excellent credit rating and earning records ("AA" and "AAA" by Standard & Poor´s) are offering these Endowment Policies.
Life Offices distribute these values as follows: An annual bonus percentage calculated from the sum assured and starting from the second year onward - also from the accumulated bonus value (interest on interest !) - is declared every year in writing and is being credited and guaranteed for each policy. The sum assured and accrued bonus values are paid in case of early surrendering of the policy.
British Life Offices have proven in the past to poduce much higher yields over the long run as compared to other European Insurance Companies. Valuation of the results of their investment is not been done according to the "Lowest Value Principle" but by using the present and real market value. The market value is much higher as compared to the book value. The increase in the value of properties and real estate is fully granted to policy holders.
The term of a policy ends with the maturity date and the maturity value will be paid out. A policy is also ending when the Life Assured dies before the maturity date is reached. Maturity value consists of the sum assured, all bonus values accumulated over the years and the terminal bonus. If termination occurs before the maturity date, all bonus values, the sum assured and a terminal bonus in proportion of the time elapsed will add up to the maturity value.
Maturity values are not guaranteed: Should bonus values go up, maturity values will be higher, if bonus values go down so does the maturity value. However, most of the term of a policy is over when purchased and the sum of bonus values earned is already known and is guaranteed. Thus poorer results, if any, during the last few years of the term of the policy will not change the performance by very much.
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