What is a potential downside of Endowment Policies?

Endowment policies are designed to provide a lump sum payout after a specified period or upon death, which can make them attractive for certain financial planning goals. However, one potential downside is that the cash value accumulated within an endowment policy is often subjected to annual taxation, which can diminish the overall benefits and returns over time. This tax treatment can make endowment policies less appealing compared to other insurance products that accumulate cash value more efficiently or have more favorable tax outcomes.

The other options describe features or attributes of endowment policies or related insurance products. High liquidity and access to cash value are typically seen as advantages rather than downsides, as they allow policyholders to access funds when needed. Guaranteed level premiums for life can be a beneficial feature for individuals seeking stable budgeting. Higher premiums compared to term insurance is a common characteristic of many permanent insurance types, including endowment policies, but this alone doesn't directly correlate to an inherent downside like the ongoing tax implications do. Therefore, the tax consequences provide a distinct disadvantage in the context of endowment policies.