An endowment policy pays the face amount to the insured if the insured survives to the policy's maturity date, or to the beneficiary if the insured dies earlier. Endowment coverage is best described as:

Why A is correct

An endowment policy combines life insurance protection with a savings element. If the insured dies before the endowment date, the beneficiary receives the face amount; if the insured is still living at the maturity date, the insurer pays the face amount to the insured. This either-way payment distinguishes endowments from pure term insurance, which pays only on death during the term. Because the insurer must pay at maturity even if the insured survives, the savings feature makes endowments more expensive than term coverage of the same face amount. Endowments are therefore attractive when the policyowner wants a guaranteed fund at a future date plus protection along the way.

Why the other options are wrong

• B) Term insurance pays only on death during the term and builds no cash value, whereas an endowment accumulates value and pays the face amount at maturity if the insured survives. The endowment's guaranteed maturity payment is the key distinction.
• C) Paying only on premature death describes term insurance, not an endowment, which also pays the face amount to the living insured at the maturity date. The either-way payment is the defining feature of an endowment.
• D) Endowments are individual contracts sold to a single insured; group insurance uses a master policy and certificates, a completely different structure. Nothing in the description suggests a group arrangement.

Memory hook

Endowment pays either way: you win at the finish line or your beneficiary wins early.