Longman Dictionary of Contemporary English
n. a life assurance savings scheme designed to pay out a lump sum when the policy matures
An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.
Policies are typically traditional with-profits or unit-linked (including those with unitised with-profits funds).
Endowments can be cashed in early (or surrendered) and the holder then receives the surrender value which is determined by the insurance company depending on how long the policy has been running and how much has been paid into it.
Usage examples of "endowment policy".
They had taken out a small endowment policy for me when I was born, and now it had matured.
The endowment policy was almost enough, and my father said he was prepared to make up the rest.
His life, however, was heavily insured in accordance with Lady Pennefather's marriage settlements, and the mortgage on the estate was in the nature of an endowment policy, and lapsed with his death.