There are two options offered for with-profit endowments:

“Low-cost” With-Profit Endowment – does not come with a guarantee for the full value of the loan. Rather, only a portion of the mortgage loan amount is assured of being returned to the policy holder by the end of the policy’s maturity period. This is the less expensive option if you can deal with the higher level of risk. When the endowment matures, profits from the company’s investment are added to the lump sum (through a bonus system) to recover the rest of the loan’s value.

Full With-Profit Endowment – includes a guarantee for the full value of the loan by the end of the maturity period. Usually more costly, it also offers the policy holder the lowest level of risk because whatever happens, they still recover at least the whole amount of the mortgage loan, plus bonuses if the company’s investments turned out to be profitable for the duration of the endowment’s maturity period.

With profits endowment

with profits endowment policies are normally enhanced with regular bonus payments. Bonuses are added to the sum assured and once added can be withdrawn at certain times, usually at death or maturity and possibly other times specified in the product terms.
One of the most popular endowment policies sold in the UK is a with-profit endowment. Offered by life assurance companies, with-profit endowments pay the buyer a fixed sum (called the basic sum assured), in addition to earnings from investments made by the company. The basic sum assured plus the investment profits are paid after a predetermined length of time, as long as the policy holder has also been consistent with the monthly payments they agreed upon.
Bonuses may be added annually (known as the reversionary bonus) and at the end of the term (a terminal bonus) depending on investment performance.

Low start endowment.

Low start endowments are another type of with profits policy where bonuses are added to the endowment sum assured.
First time homeowners find low start endowments attractive because it allows them to match their expenditure with the starting level of their income and then lets it grow in pace with their (ideally) upward financial mobility.

A low start endowment features smaller initial premiums that progressively get higher over time until the endowment matures. Payments are usually at their highest by the last 15 years of the policy.

Flexi endowment.

A policy is written say for a total term, say to the age of 65, with options to encash after 10 years without penalty. The policies are usually written in segments to allow some to be encashed and some to be continued. This may be suitable for school fees planning.

Unit linked endowment policies.

Premiums buy units in a fund of the investor’s choice. Units will be cancelled each month to buy life cover. There is investment flexibility as funds can be switched.

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    Answer: Mission creep.    I  see the same set of  circumstances today as have developed over the years, and ever more apparent today.   Namely, non-profits, primarily charitable organizations, have allowed themselves to be convinced that their mission MUST expand because of the “need” and because Directors want larger organization to support more individual and staff pay.  

   So where do they wind up?   Not enough funds to cover expanded missions, but giving levels which would have been sufficient for their original mission.   Why less funds? Partly because Directors are usually paid, and as Non-profitsp’s get larger, some paid staff is added as well.   More volunteers are needed, more space, more overhead and occupancy costs, and here’s the killer; each year the percentage of revenues devoted to salaries and overhead increase, absent a top line revenue growth occasioned by extraordinary fund-raising.  

   So Directors expect more money (after all they are running a larger organization, and have more responsibility, right?), staff deserve raises, there ARE costs in acquiring, managing, and insuring volunteers, among other things.   It all adds up to a self-serving expansion, and much whining, and gnashing of teeth when donations and fund-raising “dry up.”  

   If you want a suggestion for non-profits , here it is;   Get Real! Reshape and rebuild your mission to one that normal levels of fund raising can support, even if that means forgoing expansion into another area, or adding new clients.   It doesn’t help that non-profits are part of the fastest growing “industry” in the U.S., each justifying their creation and the “needs” that spur them, each in isolation to be commended for altruism.  

   But, I wonder how they would manage their egos and motives if they had to devote their talents to supporting already existing non-profits profits with the same or very similar missions, locations, and importantly, fund-raising and donation sources.   Think of how much more efficiently, and productively their “clients ” would benefit; how costs would go down, and revenues devoted to clients would go up.  

   Anyone who thinks that No’s don’t compete for Donors has their head in the sand. Anyone who thinks that NP directors don’t drive Boards to authorize ever-increasing efforts just hasn’t been there.   It’s time to re-think fund raising and commit to an “endowment” goal in which a percentage of each years fund-raising is set aside, with the ten-year goal of generating enough inflation-adjusted income to support the basic mission, with a smaller percentage each year contributed to the trust, which would shortly allow for increasing support levels for Clients. And, the Board must absolutely be sufficiently independent to make sure that the endowment is used or diluted because of the “need.”  

   Nobody will starve, counseling will occur, missions will be maintained.  

   In the end, more will be done for more clients, and non-profits will have created an institution that doesn’t close shop because an economic downturn forces a re-examination of budgets and costs which have become onerous , and/or a closure or reduction in services to those in “need.”