What does it mean when an insurance policy endows?

When an insurance policy endows, it means that the cash value of the policy has grown to equal the death benefit. This typically occurs when the policy reaches its endowment age, which is often set at age 100 in many policies. At this point, rather than continuing as a life insurance policy, the insurer will pay out the cash value to the policyholder, which is equal to the face amount of the policy.

Endowment is a distinctive feature of life insurance policies that have a cash value component, such as whole life or endowment policies. This means that the policyholder has a financial benefit at a certain age, demonstrating the policy's dual purpose of providing both life coverage and savings. This characteristic distinguishes endowment policies from term life insurance, which does not accumulate cash value and expires without value unless a death benefit is triggered.

Thus, when a policy endows, it essentially fulfills its promise to the policyholder by ensuring that they receive a benefit from the policy, regardless of whether they pass away before a certain age.