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Anonymous

18 Apr 2019

General Investing

What is an endowment plan and how to choose one?

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Loh Tat Tian

22 Jan 2019

Founder at PolicyWoke (We Buy Insurance Policies)

Its a form of guarantee (based on the gauranteed amount), that a certain amount of money will be given to you once it matures.

There is a component which is tagged into the endowment.

1) A non-guarateed component which is put into bonds and equities to beat whatever bank rates (fixed deposit) has offered to the mass market.

2) A insurance portion whereby 105% of premiums paid or 101% of total surrender value (whichever higher) will be given to the beneficiary in the event death has occurred.

3) Hence to many people, it is an effectively a savings plan for people, or a potential better than fixed deposit savings account.

To choose 1, it is best to get the highest Internal rate of return (IRR) based on the plan.

Also, do take note that the IRR consist of guaranteed and non-guaranteed (so choose the plan that has a higher guaranteed and total IRR is the same) for your endowment.

Form of 'forced savings' product from insurers that has a mix of life protection and 'investment'. Premiums you pay go in part to a fund comprising mostly of bonds and some equities. May be suitable for those who are not savvy about investing their own funds and do not wish to pick up any knowledge. Not good due to the very low yield. I'd suggest learning how to invest on your own which can give better returns on the same amount of money. Or if you have a low risk appetite, consider parking in fixed deposits or Singapore savings bonds instead. Hope this helps

Most endowment plans are rubbish because they lock up your money for a long period, in returns for m...

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