I have a AIA smartrewards saver 25 endowment plan since 2011. It’s a 25 year premium plan. Should I consider to stop it because I find the guaranteed returns to be too low?

Hi there!

I totally understand where you are coming from. However, just by the fact that you have already paid the policy for 9 years, I will strongly discourage you from terminating your policy.

Normally, these are the considerations which I will take into account when deciding to terminate an endowment/whole-life plan:

1) Premium size

2) What is the potential savings in the long run?

3) What was the main reason for purchasing this Endowment/Whole-Life plan? Is the main reason still valid?

4) How long have you paid the policy for? (Generally, policies that are 2 years & below, might still be worthwhile to terminate)

You can consider using the guaranteed cash coupon from your endowment plan, to do some investing. By doing so, the maturity value will definitely be much lower, but if you can put this cash coupon to generate higher returns, why not?​​​

Hi anon,

If you surrender now, you must have an alternative in mind or you are going to lose money. Your alternative must be able to give you a return equivalent to what you would have made if you held on in the worst case scenario, and factor in the losses you incur when you surrender. And it must be guaranteed. If not it is not a fair comparision.

I'd recommend you to get a revised copy of the policy illustrations. There have been bonuses credited over the years, which may make the final guaranteed maturity value higher compared to the original numbers given to you in 2011.

Treat this plan as a fixed deposit with a (potentially) higher yield that your average FD. The only other things guaranteed in investments are CPF, FDs, and SSB, and they all have their pros and cons. You can't just say BTIR because investment implies risk and no guarantee of your returns, which is not a fair comparision to an endowment with a minimum guaranteed maturity value. They are not the same asset classes.