endowment plan

Endowment Plan – Things to Know and Where to Get Them

An endowment plan offers people who want to save money guaranteed returns over an agreed maturity period. At a time characterized by low-interest rates on fixed deposits and traditional savings accounts, endowment plans have skyrocketed in popularity across Singapore – and there are many reasons for this.

Singapore residents who want to save regularly toward common goals such as retirement or college education can have their capital guaranteed as a maturity benefit within a set limited period. Thanks to the advent of short-term endowment plan options in recent years, endowment plans are no longer a long-term commitment and can range anywhere from two to six years to more than a decade, offering ultimate flexibility.

In this article, Instant Loan reviews what kinds of endowment plans are available right now, what you can expect when your policy matures and which single premiums might be best for your financial situation.

What is an Endowment Plan and How Does it Work?

An endowment plan is effectively a mashup between a life insurance policy and a traditional savings product. Customers get life coverage throughout a pre-agreed maturity period, alongside the ability to save money at the same time.

When the policy matures, a lump sum payment in the form of a maturity benefit will be credited to the policyholder. This lump sum can then be used to fund property purchases, college payments, and other life goals.

There are two types of single premiums available:

  • Participating Fund: This type of endowment plan involves putting regular premiums into a participating fund. You will choose your own investment portfolio, but the regular premiums will be paid in on your behalf. If future performance is strong, you’ll enjoy additional payouts and potential bonuses in the form of non-guaranteed returns.
  • Non-Participating Plan: Conversely, a non-participating plan provides guaranteed returns only, meaning potential bonuses are waived in favor of the policyholder committing entirely to a transparent lump sum payment when the maturity period ends. Early termination could potentially result in losses.

 

Why Do People Choose to Buy an Endowment Plan? Yearly Cash Payouts, Guaranteed Returns and More

In the current economic climate, savings accounts often have poor interest rates.

Investing money on your own involves high costs and, if you fail to seek advice, can sometimes go wrong. Endowment plans are a great savings choice for anyone with a low-risk appetite who wants to save money toward their child’s education, retirement or other life goals in a disciplined way.

What’s more, traditional life coverage is thrown in as a bonus with an endowment plan, offering the dual benefit of a comprehensive life insurance policy alongside those guaranteed and non-guaranteed returns. In addition, policyholders are free to take advantage of tax benefits on their guaranteed returns and lump sum payments, further enhancing endowment plans attractiveness to savers with a low-risk appetite.

Short Term vs Long Term Endowment Plans

Short term endowment plans offer guaranteed returns and low risks, making them an ideal alternative to savings accounts with poor interest rates for anyone who wants to grow their savings within a short limited period. Conversely, long term plans involve a long term commitment and are therefore better suited to people saving toward retirement or their children’s education later down the line.

women looking for savings in balloon form

Best Short Term Endowment Plans in Singapore

Short-term endowment plans offer competitive returns, a limited period of commitment and the life assured under traditional life coverage. Policyholders are free to pay premiums as either a single premium (i.e. a lump sum payment) or staggered over a certain period.

Usually, policyholders will have their capital guaranteed upon maturity – meaning that the total premiums paid or total annual premiums paid will be returned once the policy maturity period ends. More often than not, the policy matures in two to six years and your maturity benefit will be either guaranteed, nonguaranteed or a combination of both.

Let’s review the best short-term plans available to Singapore residents right now. We’ll follow this by a short summary of what’s available with each different type of plan.

Endowment Product Name

 

Minimum Single Premium Policy Maturity Term Guaranteed Returns Non-Guaranteed Returns
Manulife Goal 9

 

S$10,000 1 year N/A Up to 1.10% p.a.

 

Great SP Series 5A

 

S$10,000 2 years 1.20% p.a. N/A
Tiq 3-Year Endowment Plan

 

S$10,000 3 years 1.62% p.a. N/A
NTUC Income Gro Capital Ease

 

S$5,000 3 years 1.48% p.a. N/A

 

1. Manulife Goal 9 

If you’re looking for a super-short commitment period of just 1 year, Manulife Goal 9 has you covered. You’ll get a non-guaranteed return of up to 1.10% and be ensured for 101% of your total premiums paid as a death benefit.

  • Minimum premium – $10,000 (via cash or SRS funds)
  • Maturity benefit – Up to 1.1% non-guaranteed
  • Policy term – 1 year
  • Application / tranche – speak to a Manulife financial adviser to apply

2. Great SP Series 5A

Savers looking for an alternative to fixed deposits can enjoy guaranteed returns of 1.20% per annum with a minimum premium of just $10,000. A complimentary accidental insurance coverage booster is included, too, covering up to $1,000,000 per life assured.

  • Minimum premium – $10,000 (cash, bank transfer, GIRO or SRS funds)
  • Maturity benefit – 1.20% p.a. non participating
  • Policy term – 2 years
  • Application / tranche – apply online here.

3. Tiq 3-Year Endowment Plan

Anyone aged between 17 and 70 can apply for this single premium, non participating life insurance plan – including foreigners living in Singapore on a work permit or employment pass. You’ll get generous guaranteed returns worth total annual premiums of 4.9% by the end of your three-year period.

  • Minimum premium – $10,000 (Pay Now or FAST transfer)
  • Maturity benefit – 1.62% p.a.
  • Policy term – 3 years
  • Application / tranche – tranche is currently closed 

4. NTUC Income Gro Capital Ease

With an unusually low minimum premium, savers looking to pool together cash for a house, car or any other purchase can take advantage of a guaranteed yield at maturity of 1.48% with an NTC Income Gro Capital Ease endowment plan. 

  • Minimum premium – $5,000 (Pay Now, QR, Giro or SRS funds)
  • Maturity benefit – 1.48% within three years; 104.51% of the single premium
  • Policy term – 3 years
  • Application / tranche – apply online here or speak to a financial adviser

Who Should Get a Short Term Endowment Plan?

Short-term endowment plans offer savers an excellent way of achieving risk-free savings with guaranteed capital. Cash payouts are usually higher than bank accounts that earn interest at a low-interest rate, and you’ll get life coverage thrown in as an additional life insurance benefit.

That said, it’s important to note that there’s a level of commitment involved even with two to six-year short-term endowment plans. Early termination will always result in high costs and losses, so you should only invest money that you’re 100% happy to part with until the policy matures.

It’s also worth noting that if the Monetary Authority of Singapore were to increase its interest rate while your money was locked away, and banks passed on these interest rates to consumers, you might miss out.

Best Long Term Endowment Plans in Singapore

More traditional long-term endowment plans function a little differently from their two to six-year counterparts. You’ll need to make a long-term commitment of between 10 and 25 years, and contribute regular premiums toward your plan over the entire term.

What’s more, returns with longer-term endowment plans are usually non-guaranteed, meaning the maturity benefit or death benefit payouts you receive will be dependent on interest rates, market conditions, and the future performance of your participating fund.

Let’s review some of the best mid to longer-term plans Singapore residents can apply for right now:

Endowment Product Name

 

Minimum Premium Term

 

Policy Term Guaranteed Returns Available?

 

Non-Guaranteed Returns
AXA EarlySaver Plus

 

5 to 10 years 10 to 25 years No Up to 4.75% p.a.

 

Guaranteed returns of up to 1.57% p.a.

 

Cash payouts in your last three policy years

 

Great Eastern Endowment Plan Flexi Cashback

 

5 to 25 years 5 to 25 years Yes Up to 4.75% p.a.

 

3% accumulation interest rate

 

Yearly cash payouts guaranteed from second policy year onwards

 

Tokio Marine Nest Egg (GIO Cashback)

 

5 to 20 years 10 to 25 years Yes Up to 3.8% p.a.

 

Guaranteed yearly cash payouts for 8-10 years

 

Flexibility to withdraw early

 

SingLife MySavingsPlan

 

10 to 25 years 10 to 25 years Yes Up to 4.75% p.a.
PRUFlexicash

 

15 to 25 years 15 to 25 years No 4.75% p.a.

 

Yearly cash benefit paid out on the second anniversary of your policy

 

 

1. AXA EarlySaver Plus

Cash payouts in the last three years of policy ownership make this flexible policy good for customers who wish to reinvest their returns. At 1.57% p.a., this endowment plan also offers one of the highest guaranteed returns on the market.

  • Interest rate – 4.75% p.a.
  • Policy term – 10 to 25 years
  • Withdrawal / payouts – x3 cash payouts in your last three policy years
  • Application / tranche – Learn more here 

2. Great Eastern Endowment Plan Flexi Cashback

Savers who sign up for this plan can start withdrawing payouts from their second policy year onwards or redeposit funds to supercharge their investment portfolio. You’ll also get guaranteed yearly cash payouts.

  • Interest rate – 4.75% p.a.
  • Policy term – 5 to 25 years
  • Withdrawal / payouts – guaranteed yearly in cash after second policy year
  • Application / Tranche – speak to a specialist adviser 

3. Tokio Marine Nest Egg (GIO Cashback)

The flexible premium payment terms available with this endowment plan make it suitable for liquidity-oriented investors who want to reinvest their maturity benefit or death benefit. You’ll also get a lump sum of 105% of all total annual premiums paid, including interest and reversionary bonuses, as part of the policy’s life insurance coverage.

  • Interest rates – up to 3.8% p.a. (non guaranteed)
  • Policy term – 10 to 25 years
  • Withdrawal / payouts – flexibility to withdraw or reinvest as you wish after the second policy year
  • Application / tranche – learn more here 

4. SingLife MySavingsPlan

Anyone who wants to save money with capital guaranteed at 100% can take full advantage of this popular 10 to 25 year policy. There’s no early cash withdrawal option, but savers in it for the long haul stand the chance of earning potential bonuses upon maturity. 

  • Interest rate – up to 4.75%
  • Policy term – 10 to 25 years
  • Withdrawal / payouts available – 100% capital guaranteed if you hold until maturity
  • Application / tranche – learn more here 

5. PRUFlexicash

The yearly cash benefits on offer with this policy make it a great choice for customers who find themselves facing an unexpected difficult financial situation – or who just wish to draw-down cash to pay for family holidays, car purchases or other mid-range luxuries.

  • Interest rate – 4.75% p.a.
  • Policy term – 15 to 25 years
  • Withdrawal / payouts – receive yearly at 5% of the sum assured after your second policy anniversary
  • Application / tranche – currently not available

Who Should Get a Long Term Endowment Plan?

Mid to long-term endowment plans are traditionally used by Singapore citizens who want to put aside money to pay for their child’s education or fund a comfortable retirement – but the world really is your oyster once your policy matures.

One thing worth noting here is that you’ll need to agree to a long-term commitment that will run on for several years, potentially even a decade before you can best benefit from your investment. Some savers might do better with a Robo-advisor or a more traditional savings plan, particularly if you’re worried about early termination – which usually involves high costs.

Nevertheless, those willing to wait for their savings to peak at the point of policy maturity will benefit big – not just in cash payouts, but from the comprehensive permanent disability, death benefit and life coverage benefits also afforded by longer-term endowment plans. 

investing skyrocket men

Things to Consider Before Getting an Endowment Plan

Before settling on which type of endowment plan is right for you and submitting an application, it’s important to be aware of the following:

All the key features of endowment plans in Singapore

You’ll need to fully understand what your preferred policy includes in terms of life insurance, the ability to save regularly over a specific period of time, what maturity benefit you’re entitled to and whether any tax benefits or exemptions are up for grabs. 

Whether your circumstances are a good fit

If you’re living with a permanent disability or a medical examination reveals you are in poor health, then the life insurance benefits that come with an endowment plan will be a big draw for you. That said, there are many other reasons to apply, including if your ability to earn interest is severely limited with banks and fixed deposit funds.

Which type of plan is best for you

It’s also important to think very carefully about your individual financial circumstances, needs, life stage and risk appetite before you purchase an endowment plan.

Whether the provider suits you

All endowment plan providers vary when it comes to customer service, claim settlement ratio, financial stability and terms and conditions – so be sure to double-check your provider can 100% meet your needs.

The current tranche

Not all endowment policies are available at all times – single premium plans and short-term plans especially are usually issued in tranches. Double-check the current tranche of your preferred policy before you apply.

Conclusion – Is an Endowment Plan Right for You?

There’s a lot to think about when it comes to getting an endowment plan in Singapore, from your own personal financial situation and goals to what single premiums and insurance product types might be the best fit. Before you apply for an endowment plan, make sure you:

Key Takeaways

  • Determine whether a short term endowment plan or longer-term agreement is best for you
  • Ensure your preferred plan has a current tranche and is accepting applications
  • Understand the policy maturity, yearly payouts and insurance product T&Cs to get the most out of your investment experience

Here at Instant Loan, we like to share all the latest news regarding savings, investments, loans, different insurance product types and more. We also offer a convenient loan comparison service where you can retrieve three free loan quotes from licensed moneylenders. Get your three free quotes today!

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