a) Describe the difference between a term life insurance contract, a pure endowment contract and an endowment insurance contract
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A. A term life insurance contract, a pure endowment contract, and an endowment insurance contract are different types of life insurance policies that offer different benefits and features. Here is an explanation of each type of contract:
A term life insurance contract is a pure life insurance product that provides financial protection to your family in case of your unforeseen demise. It does not have any investment component or maturity benefit. You pay a fixed premium for a specified period (term) and get a fixed sum assured (coverage) in case of death during the term. If you survive the term, you do not get any money back. Term life insurance is the most affordable and simple form of life insurance.
A pure endowment contract is a pure investment product that does not have any insurance component or death benefit. You pay a fixed premium for a specified period and get a fixed sum assured (maturity benefit) at the end of the period. If you die before the end of the period, you do not get any money back. Pure endowment contracts are rare and are usually combined with other types of contracts to form endowment insurance contracts.
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