Which of the following types of life insurance policies pays the full sum assured to the beneficiaries if the insured dies during the policy term or to the policyholder on the maturity of the policy if he/she survives the term?

Answer: Option 2

Endowment plan is a type of life insurance plan, which is a combination of insurance and savings. A certain amount is kept for life cover – insurance, while the rest is invested by the life insurance company. In an endowment plan, if the life assured outlives the policy term, the insurance company offers him the maturity benefit. Moreover, endowment plans may offer bonuses periodically, which are paid either on maturity or to the nominee under death claim. On death, the death benefit is payable to the nominee. Endowment plans are commonly known as traditional life insurance, although, there is an investment component the risk is lower than the other investment products and so are the returns.