Co-Founder, Coastal Financial Partners Group, California
Endowment plan, in the context of life insurance, can mean a few things.
For example, when we design proposals for clients which involve flexible premium products such as universal life and its variations, we tend to solve for premiums based on conservative interest projections and aim at growing the cash value to "endow" at age 100 meaning we want the cash to grow to equal the initial death benefit purchased. Or we solve for maximum premium for a given death benefit to maximize cash values.
Pure endowment policies are no longer offered in the US around 1980 due to tax code changes which declassified them as life insurance. In 1988 the term "modified endowment contract" was introduced into the code to further limit "investment" oriented life insurance. But the endowment concept is still alive and well when we design life insurance for maximum cash value accumulation within today's limits.
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For example, when we design proposals for clients which involve flexible premium products such as universal life and its variations, we tend to solve for premiums based on conservative interest projections and aim at growing the cash value to "endow" at age 100 meaning we want the cash to grow to equal the initial death benefit purchased. Or we solve for maximum premium for a given death benefit to maximize cash values.
Pure endowment policies are no longer offered in the US around 1980 due to tax code changes which declassified them as life insurance. In 1988 the term "modified endowment contract" was introduced into the code to further limit "investment" oriented life insurance. But the endowment concept is still alive and well when we design life insurance for maximum cash value accumulation within today's limits.