Is an Insurance endowment plan a necessity for retirement?

No, I honestly think endowment is NOT necessary for retirement.

Yes, insurance is important, such as hospital medical insurance, term life, term illness etc.

but there are tons of ETF, REITS etc, all giving higher returns. If you have 10, 20 years to spare, you can easily choose some ETF that fits you. From growth, to income, to preservation.... and all the expenses fee are much lower

Hello! It’s good that you’re planning ahead right now! We’re both of the same age and it’s really encouraging to see individuals like you to start planning and thinking for your future.

3.25%-4.75% are the interest rates set by MAS. In endowment plans, there are guaranteed and non-guaranteed amounts. In addition, the amount of money you get back in your maturity year is also based on the performance of the
market over the years. But this will not affect too much as you have a long term horizon in your planning.

In Prudential, Pruwealth II is one of the most popular product for insurance savings/endowment. For retirement, we have quite a few products but our latest product is PruActive Retirement.

Most importantly, it’ll be good to sit down with your advisor and plan it out. If you haven’t done so, it’s okay! Baby steps! Do reach out to me should you have any queries or any help I can anchor in. Thank you!

1. It's not about the returns. You buy endowments/annuities to transfer the risk of retirement cashflow to the insurer. You buy insurance for death and illness, you buy insurance for your wealth as well.

2. If you want the best returns. Get equity. Only recommendation? Definitely not. You diversify your asset classes to ensure that you have an even spread of quality cashflow in your entire portfolio.

3. I will not compare CPF Life with annuities. For one, CPF Life legal and contratual obligations are subject to policy change. They are not set in stone unlike insurance contracts. Which are legally binding, and re-insured.

4. A good amount? 20% of your income. Anything more, you risk financial crunch. Anything less, you are not setting aside enough.

5. No such thing as a best possible option. Get all of them because each of them have their own specific role in your entire portfolio.

6. Speak to a financial adviser to cut your learning curve.

Hi Anson,

Congrats on taking care of your financial planning by starting with asking questions at this financial forum. And with your age, thinking on retirement planning is a right step to ponder forward. As you are young. Its beneficial to start retirement planning early, especially with the luxury of a young age, hence time horizon is at your side. For retirement planning, there are different types of products available, endowment is 1 of the alternative.

On whether is it good to add endowment into your portfolio for retirement planning - This depends on one's risk appetite. Endowment, in general is a safer tool to consider compared to investment link policies. Investment link policies yields higher returns, but ILP for higher returns, will come with higher risk in general.
Some clients prefer endowment plans,as for most popular endowment plans, its beauty lies in having the option of having a limited time premium payment option, and having protection coverage and reaping the endowment maturity benefits at the end of maturity period- which comprises of the guaranteed component and the non-guaranteed component. Hence in a way, it gives you some form of ‘safetly net.’
As per the other professionals have mentioned, 3.25% or 4.75% is the illustrated investment rate of return and they do not represent the returns that you may received. These illustrated return are not guaranteed and do not represent the upper and lower limits of the returns you may received.

A safer guide may be to look at the guaranteed return portion for conservative view of the returns. But note that the guaranteed maturity benefit of your policy may be less than total premiums paid as per mentioned in policy illustrations, though rarely this will be the case.

If you are talking about retirement, you may like to look into “Gro Retire Ease” product by Income which is popular among my clients due to its flexibility and benefits. However, do note to have the basic financial for healthshield and life insurance protection covered first, before you go to the next step of savings or retirement plan.

Also it is important to set aside 6 months of your salary as emergency cash for rainy days.

Hope this helps. Feel free to reach out to me here if you are keen to explore further on a no obligation customised financial review based on your needs and requirements. Take care and stay safe.