Final answer:
A life insurance policy endows when the cash value equals the face amount, and the policy matures, allowing the policyholder to access the full value. This endowment usually terminates the need to pay further premiums. Whole life policies offer both death benefits and a growing cash value that can be borrowed against.
Step-by-step explanation:
When a life insurance policy "endows", it refers to the point in time at which the cash value of the policy equals the face amount or death benefit. This means that the insurance policy has reached its maturity, and the policy pays out the full amount to the policyholder. This is typically the point where the policyholder stops paying premiums because the policy has essentially served its purpose of accumulating value which is now fully accessible.Cash-value life insurance policies, also known as whole life insurance, provide both a death benefit and an accumulating cash value over the life of the policy. The premiums paid by the policyholder not only secure the death benefit for the beneficiaries but also contribute to building the cash value. This accumulated amount can also be used by the policyholder during their lifetime, such as to borrow against for loans that must be repaid with interest.Policies can indeed pay out under various conditions, including when medical expenses are incurred, the policyholder dies, or assets covered by different types of policies, such as cars or dwellings, are damaged or stolen. However, in the context of life insurance endowment, the payout refers specifically to the accumulation and maturity of the policy.