What characterizes an endowment policy?

An endowment policy is characterized by its fundamental purpose of providing a lump sum payment at the end of a designated period, or upon the insured's death if it occurs during that period. This unique feature distinguishes endowment policies from other types of life insurance products.

Typically, the specified term can range from a few years to several decades, and once the term is completed, if the insured is still living, the policy will pay out the agreed sum. This makes endowment policies not only a form of life insurance but also a savings or investment product, as they can serve to accumulate cash value over time.

In the context of the other options, the first choice about a policy that only pays upon death does not apply to endowment policies, as they can also pay out when the term expires. The second choice incorrect regarding cash value, since endowment policies typically accumulate cash value. Lastly, the reference to a temporary insurance policy with low initial premiums does not align with endowment policies, as they generally involve higher premiums due to the dual nature of providing both death benefit and savings component.