facebookI am paying insurance for 25 years. Any recommendation on savings plan that I can save either single premium/monthly/annually which also help to pay off my insurance premium with some bonus to keep? - Seedly

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Anonymous

29 Aug 2020

Saving Hacks

I am paying insurance for 25 years. Any recommendation on savings plan that I can save either single premium/monthly/annually which also help to pay off my insurance premium with some bonus to keep?

Discussion (3)

What are your thoughts?

Elijah Lee

Elijah Lee

29 Aug 2020

Level 18·Independent Financial Advisor at Phillip Securities (Jurong East)

Hi anon,

I am reading this as you are having a limited payment whole life plan that you are paying off now, over 25 years, and you would also like to get a savings plan, with a cashback/coupon feature whereby you can do some forced savings, and then take the cash back/coupon payout from the 2nd year onwards to pay your whole life plan.

There are many plans with cashback/coupon, but I generally don't find this a good way to pay off other plan's premiums with the cash back feature. Remember that by doing so you are committing to yet another savings plan with a new tenure for your premiums.

Also, such plans don't pay a very large cash back relative to your yearly premium. If you are paying say, $2K for a whole life insurance, a cash back policy would probably require you to pay something like $4K/yr to get a cash back of $2K/yr in the second year. So your total committed premiums becomes $6K/yr. Personally I would just save the money needed from my income to pay off the $2K. However, if you can afford $6K/yr premiums in this case, then the pay off comes from the final maturity payout of the savings plan which is likely to have a fair bit of potential gain (although it will likely be completely non guaranteed)

Some plans that have such a cashback feature are:

  • AIA Smartrewards Saver

  • Aviva MyRegularPay/MyEasySaver

  • China Taiping i-WealthBuilder/i-Cash

  • AXA Savvy Saver

  • NTUC Gro Secure Saver/Gro Flex Saver/Gro Steady Saver

etc...

If you are looking at such plans, then consider evaluating all of them on the basis of premiums, returns, the amount of cashback, etc, in order to see which plan will suit your needs most.

Hey there!

There are plenty of insurers that allow for saving plan options :) You can opt either for a short term savings plan or an endowment plan which typically has a long term horizon. Most of them typically require a certain lock in period eg. Five years to fifteen years depending on which you opt for. There are endowment plans that give a guaranteed bonus while guaranteeing your capital eg. AIA Smart Wealth Builder.

You may have to avoid certain savings plans that do not guarantee your capital (yes there are plans like that). Just look at the benefit illustration table and you'll be able to compare the surrender values.

Do engage a licensed financial advisor to explore your options. All the best!

Financial planning is an integral part of life. You can reach me here to find out more.

Hi there!

Seems like you’re looking for something called anticipated endowment policy. Most, if not...

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