Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

Endowment policies are specifically structured to provide a benefit either upon the insured's death or after a predetermined period, making them a versatile financial product. This means that if the policyholder passes away before the end of the specified term, their beneficiaries will receive a lump sum. Conversely, if the policyholder survives beyond the term, they will receive the policy's maturity benefit.

It is important to understand that this dual benefit is what distinguishes endowment policies from other types of life insurance. They combine elements of both protection and savings, ensuring that the policyholder (or their beneficiaries) receives a payout in either scenario, which can be particularly appealing for financial planning purposes.

Other options do not capture the true nature of endowment policies. Some might imply that they focus solely on death benefits or are designed for specific financial goals, which would not encompass the full range of benefits that endowment policies offer.