In terms of insurance, what does the term 'endowment' refer to?

The term 'endowment' in insurance specifically refers to a type of life insurance policy designed to pay out a benefit either upon the insured reaching a specified age or upon their death before that age. This structure essentially combines elements of both life insurance and savings or investment. Policyholders receive a lump-sum payment, called the endowment benefit, at a predetermined age, which can be an incentive for savings.

This option is correct because it aligns with the fundamental characteristics of an endowment policy. The other options focus on different aspects of insurance. For instance, the component determining policy premiums pertains more to the underwriting process and risk assessment rather than the goal of endowment policies. Lapsed coverage relates to the failure to renew a policy, which is unrelated to the endowment concept. Finally, hazards affecting property values are a factor considered in property insurance but do not relate to the life insurance aspect described by endowment policies. Understanding the core definition of endowment clarifies its purpose in the realm of life insurance, distinguishing it from other terms and concepts in the insurance field.