Should I get an Endowment Plan? (Great Eastern Great Wealth Multiplier)? - Seedly
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Anonymous

Asked 2w ago

Should I get an Endowment Plan? (Great Eastern Great Wealth Multiplier)?

Hi, im 23 and just started working and have 1 year of emergency funds and 6 month of insurance money as backup. Currently, I am saving up around $800-$900 per month. I was thinking of planning to take up this plan which is a 10 years (around $300 per month). Any advice if I should take up this plan or is there any better endowment plan to recommend?

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Hi anon,

Great Wealth Multiplier is a lifetime endowment plan which will grow your money indefinitely with flexibility to withdraw your funds later on, at any point.

Some of the questions you should ask yourself are:

  • Is this the type of plan I want in my portfolio? What am I buying the plan for?

  • Is the time horizon suitable for me?

  • What are the guaranteed returns on this plan? What about the projected non-guaranteed returns?

  • Is the premium sustainable for me?

Especially important is your purpose in getting this plan. If you wanted to save money without any definite timeframe and have something to draw on later, this plan would work. If you wanted to save money for retirement and get a stream of income when you retire, such a plan might not be so suitable.

If this is indeed the sort of plan you are looking at, then you should be aware that many insurers offer plans similar to Great Wealth Multiplier. You can compare across various insurers to look at the numbers and find a plan suited to you.

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Hey there!

If you are risk averse and are looking to meet a guaranteed long term need, then an endowment plan will work great for you since the capital is usually guaranteed (but please check the policy illustration to compare the guaranteed portion and what you're paying. It should match up. If not, don't get it).

There are endowment plans that allow you to pass it down to your children in the future so that the plan can keep rolling eg. AIA Smart Wealth Builder etc. So it depends on your time horizon and objectives here.

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

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There are plenty of endowment policies that are available in the market. In truth, what's more important is how the plan is able to fit into your goals and objectives.

Furthermore, since your money is invested into the insurer's participating fund, it will be good to understand its background and track records. This is for the purpose to determine whether the insurer is capable of giving you the promised returns over time.

More Details:

What is a Participating Fund?

I share quality content on estate planning and financial planning here.

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The policy is an "open ended" form of savings for future goals if you do not have an exact date/ year that you require money. Certain goals such as property upgrades, buying a car, children's education, retirement, 2nd property for investments can be partially funded by this since you can stagger your payout at later ages.

It really depends on your needs as there are several variations of endowment types. some with liquidity "cashback" option, some with a fixed end date.

If it is something that aligns with your goals and needs, by all means go for it. Do note the guaranteed breakeven year is 15 so withdrawing or cancelling the plan midway will result in some losses. Returns are also within a 2-4% conservative range so if you're looking for something with high investment retutrns (which also entails much higher risk), it may not be the most appropriate financial product for you. That said, the risk is much lower if you can manage your expectations on returns. Ultimately, it will be effective cash when you need it and whenever you want it in the future. ​​​

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