What is Accelerative Endowment?

An endowment policy is a life insurance contract or policy that enables an insured individual to have entitlement to the payment of a lump sum of money after the policy matures. An accelerative endowment is an insurance option used in a whole life insurance policy, this is an option that allows dividends to accumulate before they are later converted into an endowment policy. Once these dividends are allowed to accumulate, they are released to an insured person as a lump-sum payment at a certain time, usually before the normal maturity date of the policy.

How Does Accelerative Endowment Work?

The term accelerated means increased speed. This term as used in accelerative endowment means that a policyholder would receive the payment of an endowment policy at an earlier date than the maturity date of the policy. Dividend accumulations in a whole life insurance policy are converted into an endowment policy which a policyholder receives before the maturity date. An accelerative endowment is an insurance policy that enables the insured collect payment of the policy before the set date, this is usually before the death of the insured. Usually, payments for whole life insurance policies are meant to be made after the death of a policyholder, accelerative endowment, when used, allows the policyholder receive accumulated payment before his death.

Accelerative Endowment vs. Whole Life Insurance

Whole life insurance policies provide coverage for the death of the policyholder, these policies come with death benefits that are paid in full when the insured passes on. However, in the case of an acceleration endowment, it is an insurance option used in whole life insurance that allows a holder receive insurance benefits and payment before death or maturity date. This entails that the payment of dividends that the insured has accumulated over a period of time are converted into an endowment policy and paid to the insured before the initial time of payment. The accumulated dividends are paid in cash value or as a lump-sum of money to the insured.

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