Which insurance product combines a reducing term insurance policy with a savings account?

The endowment policy is a unique insurance product that combines elements of life insurance coverage with a savings component. This type of policy typically pays out a lump sum either upon the insured’s death during the term of the policy or at the end of the specified term if the insured survives.

This dual feature is what distinguishes the endowment policy from others. While it provides a death benefit similar to term insurance, it also accumulates cash value, which allows for savings and investment growth. This makes it particularly attractive for individuals looking to ensure financial security for beneficiaries while simultaneously saving towards a financial goal, such as education or retirement.

In contrast, the other options do not effectively combine both insurance and savings in the same way. For example, term policies solely provide death benefits without any savings feature. Whole life policies do offer cash value accumulation but are different from endowment policies in how the benefits are structured and accessed. Universal life policies also have a savings element but function differently regarding premium payments and the flexibility of coverage. Hence, the endowment policy stands out as the correct choice as it encompasses both a reducing term insurance aspect and an inherent savings element.