Endowment Plans Singapore
What is An Endowment Plan Or Savings Plan?
Endowment plans commonly known as savings plans is an insurance policy that helps you to accumulate wealth given a period of time (usually 10,15, 20 or 25 years) and gives potentially higher returns from the capital amount that you invests. The return of investment are projected.
The saving plans will usually have insurance coverage of basic sum assured for death and disability benefit. You have a choice of adding different riders to your policy if you would like to have additional insurance coverage (e.g. early stage critical illness insurance rider or critical illness insurance rider) during the policy period.
During maturity or end of policy term, the policy will pay the maturity benefit or the death benefit (if death happens during the term of the policy).
Why Purchase Endowment/Savings Plans?
There are various benefits when purchasing an endowment/ savings plans.
- Insurance coverage during the term period
- Discipline savings
- Potentially higher returns compared to leaving the money in the normal bank account
- Fulfilling a financial goal (e.g. retirement, children education)
- Choice of adding riders (e.g. critical illness insurance riders, personal accident rider)
- If the endowment policy is for juvenile, parents have assurance that the child will still inherit the amount if unforeseen circumstance happen (e.g. pre-mature death, unexpected disability, strike with critical illness)
- Waiver of premium benefit
There are various reasons why consumer would like to purchase an endowment policy, and we strongly encourage consumers to take a longer term view horizon when purchasing an endowment policy. If you are looking for short term gain (e.g. 1-2 years), endowment policies might not be the right financial vehicle to meet your financial goal.
And if you would like to gain potential returns of 5-9% returns of investment (ROI), endowment policies might not the right instrument to meet your financial goal too. Maybe other investment plans or financial instruments with higher projected returns will be able to meet your financial goals.
Are There Short Term Savings Plan In Singapore?
Time to time, you will see insurers coming out with short term savings plans but generally, in the market, the plans are minimum 5 years term period.
However, as mentioned earlier, some insurers might come out with shorter terms (e.g. 3 years) policies. It is still best to check with your insurer for the promotional products.
Difference Between Endowment Plans Vs. Fixed Deposits
Endowment insurance plans are policies that gives you potentially higher returns of tenure between 5-25 years or more. The investment returns are based on company’s participating fund performance and will be declared yearly. Consumers have to continuously pay for the premium until maturity. Upon maturity (e.g. 25years), the maturity amount will be paid back to the policy owner.
For fixed deposits, the tenure is usually shorter (between as short as 1 week to 48 months). The interest may be accumulated about 0.35% annually. If you pre-maturely take out the money and not wait till maturity, your capital sum will not be affected.
However, for endowment policies, if you cancel or lapse the policy before maturity, you might lose the capital sum. Therefore, we strongly encourage you to understand your risk profile, time horizon and your financial liquidity before investing your monies into the different financial instruments.
You may contact our Financialogist to discuss the best options based on your risk profile.
Endowment Insurance Plans Comparisons
We have gathered and captured from Compare First website of some of the quotations from the different insurers.
The following are the information that we have input:
Age Next Birthday: 30
Annual Premium: $5,000
Premium Payment Term: 5 years
Policy Term: 10 years
And here are our findings:
Disclaimer: The above illustration is for reference only. For full quotation and full details, please refer to the individual insurer and Compare First website for the most updated information.
How Do I Start My Savings Plans?
I’m glad that you want to start savings for your future and making sure that you have enough funds when you are older. For a start, you might want to know:
- What is your budget?
- Is the budget too little or too much?
- How long do you want to save?
- Is the time horizon too short or too long?
- Is it for any specific purpose or financial objective?
- Do you want to have flexibility to withdraw money?
Therefore, in order for us to address all these questions, we would highly encourage you to speak to a licensed and professional financial planner.
You may contact us or leave your contact details below so that we can get in touch with you shortly to address your savings needs.
About Financialogy SG
Financialogy SG is an online platform to educate consumers about the importance of financial planning. Our aim is to empower you so that you are able to make sound financial decisions and be equipped with the financial know-how.
Want To Know More About Endowment Plan?
If you would like to know more about endowment insurance plan, you may contact us at (+65) 9380 2839 or you can click on the button below to enquire about the different financial services that we provide.
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- Early Stage Critical Illness Insurance
We are a licensed and certified Financialogist in Singapore that provides a comprehensive financial planning solutions to meet all your financial and insurance protection needs.
Address: 47 Scotts Road, Goldbell Towers, Singapore 228233
Contact Number: +65 9380 2839
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