Here’s Why Short-Term Endowment Plans Are ALWAYS Oversubscribed In Singapore
It’s important to have a plan set in advance to fulfil your financial goals. This include instances such as making the down payment of your new flat, paying for your children’s university tuition fees, and even for your own retirement. For reliable and predictable returns, many would opt for an endowment plan. In fact, short-term endowment plans are very popular in Singapore. These are insurance policies that are less than 10 years, and are well suited for people that are looking to beat yearly inflation. Depending on the provider, there are also many other perks and benefits that are included in your endowment plan of choice.
Given its plus sides, you should seriously consider short-term endowment plans. These saving instruments offered by insurance companies could be an ideal solution.
How do endowment plans work?
An endowment plan is essentially a life insurance contract that focuses on helping you to save money. There is an assured payout on maturity.
A significant advantage that these plans offer is that they have flexible premium payment options. You can choose to pay a single lump sum premium or spread out the payment over several years. If you are lucky, you may come across promotional features such as an upfront premium discount.
The policy term can also be varied. This allows you to receive the maturity amount at the time that you need it.
Consider the benefits that an endowment plan provides:
- You get to select the maturity period. So, if you need money in, say, six years, you can buy an endowment policy that matures in 2024.
- There is an insurance component as well. If the person who buys the endowment policy dies of natural causes or meets with a fatal accident, the insurer provides certain predefined benefits.
However, it’s important to remember that the prime objective of buying an endowment policy is the returns that it offers. The insurance component on death/accidental death is relatively low.
- Purchasing an endowment policy forces you to save. Investing regularly is the best way to build your wealth over the medium to long term.
Before buying an endowment policy, you must get an idea about the returns that you can make. You can opt for a plan that offers a guaranteed return or one that provides a guaranteed return PLUS a non-guaranteed benefit.
Learn more about the participating endowment plans and non-participating endowment plans available from TIQ now.
Understand the difference between a Participating and Non-participating endowment policy
A participating endowment policy will pay you a guaranteed amount as well as possible additional amounts in the form of bonuses. Here’s how it works:
The premium that you pay is pooled with the premiums of other participating policies and invested in a special fund. This fund is invested in bonds, stocks and other assets. You get to “participate” in the profits that the fund makes. This (non-guaranteed) profit is paid to you in the form of bonuses.
A non-participating endowment policy, on the other hand, does not offer this benefit. Your returns will be restricted to the guaranteed benefits.
Which policy should you opt for? That depends on the type of returns that you want. If you want to know the exact maturity amount in advance, a non-participating endowment policy could be a better choice.
But if you are open to the idea of making potentially higher returns, you could opt for a participating endowment policy. Remember that the guaranteed returns are usually higher in a non-participating endowment policy. On the other hand, the total returns on a participating endowment policy could be higher. But of course, you can’t be sure about that.
TIQ by Etiqa Insurance Pte. Ltd, a digital insurance channel, offers both participating and non-participating endowment policies. Currently, TIQ is providing several attractive benefits for signing up for one of these endowment plans.
eEASY save – Non-participating endowment plan
eEASY save is a non-participating endowment plan that offers a guaranteed return of 2.46% per year. These are some of its benefits.
- Policy term: 6 years
- A lump sum premium payment with attractive upfront discount
- Flexible premium sizes: You can opt for any of the following options in the table.
- Your capital is guaranteed in excess of 100%: You will receive 116% of the premiums that you have paid upon maturity.
- In the event of unforeseen circumstances, there is Death Protection coverage at 105% of the total premium paid, throughout the policy term. The digital insurer is also providing a complimentary Accidental Death benefit at 100% of total premium paid for the first two policy years.
Find out more about eEASY save now.
eEASY savepro – Participating endowment plan
eEASY savepro is similar to eEASY save except for one crucial difference. eEASY savepro is a participating plan.
What does this mean? Not only will you get a guaranteed benefit, but you will also receive additional bonuses if the fund that the insurance company invests in on your behalf performs well.
Here’s the return you will receive if you buy eEASY savepro:
- If the return on the fund is 4.20% per annum, your total maturity return will be 3.26% per annum.
- If the return on the fund is 2.70%, you will earn 2.08% per annum.
The guaranteed maturity return for a 7-year policy term on eEASY savepro is at 0.44% per year. This is substantially lower than eEASY save’s guaranteed return of 2.46% per year at the end of the 6-year policy term. However, depending on your risk appetite, the participating plan allows one to yield higher potential returns.
Learn more about the eEASY savepro now.
Sign up and receive attractive benefits
TIQ by Etiqa is running a promotion that offers a slew of benefits to customers who sign up for the eEASY save or eEASY savepro plans by 5th August 2018. Signing up for any of these policies can get you an attractive upfront premium discount and free Takashimaya shopping vouchers. You shall also receive S$50 referral incentive when you purchase an eEASY save series plan and successfully referred someone else to make a purchase of a plan in the same series through a referral code.
For more information, please visit tiq.com.sg
This article is published for general information only and does not have any regard to the specific financial or investment objectives, financial situation and the particular needs of any specific person who may read this article and is not a contract of insurance.
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You are recommended to seek advice from a financial adviser before deciding whether to purchase the policy. In the event that you choose not to seek advice from a financial adviser, you should consider whether the policy is suitable for you.