Endowment Plan Singapore: What is it, Who Offers it, and How to Choose the Right One for You
One of life’s greatest gifts is knowing that your future and your family are secure financially and emotionally. For instance, a child’s education will be one of the top priorities a parent may think of, which can be costly. Due to the growing cost of living, it can be challenging to manage your income and have some savings, even among dual income families. To help you plan your future, insurance companies offer endowment plans in Singapore, which can help clients save for the future as they earn interest.
What is an endowment plan in Singapore?
An endowment plan is a policy that allows you to save money for specified milestones. It is a form of term life insurance policy with a savings plan. Endowment plans are basically an insurance/savings hybrid product that is often recommended as a means to save for your child’s education, retirement, or some other defined milestone.
Once the policy reaches maturity or the insured passes away, the policy pays a lump sum payment. Because of the combined insurance and investing component, the cash value at maturity is often higher than standard term or whole life insurance. For the higher possible return, you will be charged more significant premiums. Death, total and permanent disability, and critical sickness are all possible insurance coverage options.
With savings account interest rates on the decline, many insurers have introduced short-term endowment plans as an option to grow your money. Mid- to long-term endowment plans, on the other hand, can be a valuable instrument for saving for major life events. There has been a recent influx of short-term endowment schemes. Rather than needing a decade or more to mature, these endowment plans mature in two to six years.
How to choose the best endowment plan Singapore
A variety of variables should be considered before purchasing an endowment plan. For starters, look for a plan that provides flexibility, extra riders/benefits, a simple application process, and expanded coverage (resulting from illness/death). The type of endowment plan, investment returns, premium duration, financial benefits afforded, and payout age options of the endowment plan Singapore should all be taken into perspective.
Since endowment plans offer bonuses, it is important to consider bonuses that come with the plan. Insurers apply bonuses to the premiums, and they help protect your investment returns from market uncertainties. Therefore if returns will be low, the bonus will not be adequate to pay premiums and, in this case, to have to pay the premium.
Sometimes you can trade endowments, and the buyer will acquire the endowment plan at a higher value than the surrender value the insurer is willing to pay. Once the policy has been assigned to the buyer, you will not be liable for the policy, and the buyer should maintain the plan and benefit once its value increases. Therefore if you are planning to sell an endowment plan, you can seek free online valuation.
Examples of available Endowment Plans Singapore.
There are several endowment plans available to pick from in the market. Here are some of the top endowment plans offered in Singapore.
This is a whole life savings policy that allows you to enjoy wealth accumulation without paying premiums for a lifetime. After your money has acquired the cash value, you can decide to withdraw for use elsewhere. Since the plan is a whole life savings policy, you can add a loved one as a second life to reap the benefits even if you die. The plan offers flexibility in policy terms and premium, and there is a guaranteed 100% of your cash if you leave the policy until maturity. The premium and policy terms are 10—25 years at an interest rate of 4.75% per year non-guaranteed returns. The downside with this plan is there are no guarantees of maturity bonuses, and if you surrender the policy before the end of the term, you could lose some of your cash.
NTUC Income Gro Junior Saver
This is a short-term endowment plan that allows you to take care of your child’s education needs. There are several benefits for your kid’s secure future, and there is a 100% guarantee of assured sum at maturity of the plan with three guaranteed payouts. The premium term is five years from an internal rate return of 1.67%-3.91%. In case of food poisoning, dengue, or hand-foot-mouth disease, there is a $100 daily cash payout per admission for a month and bonuses in cases of permanent disability or death of the child.
Prudential PRUWealth II
Another life savings endowment plan Singapore available is Prudential PRUWealth II, which offers the alternative to paying single premiums with capital guaranteed after the tenth year. Advantages include a guarantee of money after the tenth policy tear and flexible premium terms of five, ten, and twenty years. For a 20-year premium alternative, the guarantee of capital is after the policy’s 15th, 18th, and 20th years. The downside is that if you surrender the endowment plan before the capital guaranteed duration, you could incur some loss.
AXA Early Saver Plus
The AXA Early Saver Plus endowment plan offers guaranteed returns through cash payouts in the last three years of the policy term. The plan has a premium term of five it ten years and a policy term of 10 or 25 years at an interest rate of 4.75% per year non-guaranteed interest and 1.57% per year guaranteed interest in a cash payout. You receive additional payouts covering outpatient expenses for up to $200 per claim, but they are only limited to two events per policy. Most importantly, you get the plan without medical exams, and all basic pan applicants will be accepted. Also, the policy covers death, terminal illness, and disability. However, the downside is your money is not guaranteed, and the policy doesn’t have an option of early withdrawal. The maximum eligibility age is 60 years.