What type of policy is an endowment policy classified as?

An endowment policy is classified as a qualifying bond because it is designed to provide a combination of life insurance coverage and investment savings. Specifically, endowment policies are structured to pay out a sum of money either upon the death of the insured or after a specific term, whichever occurs first.

The unique feature of a qualifying bond, in the context of taxation, is that it meets certain requirements set out by tax legislation, allowing the policyholder to benefit from favorable tax treatment on the proceeds. This includes exemptions from income tax on the death benefits and the potential for tax-deferral on the investment growth, which is a key benefit of endowment policies.

Other classifications, such as non-qualifying bonds or investment bonds, do not have the specific tax advantages that qualifying bonds provide. While investment bonds might apply to other types of investment-focused policies, they generally do not include the life insurance component, which is central to endowment policies.