Asked by Anonymous

What's the best endowment plan right now (5 or 10 years maturity)?

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 18 Mar 2019

    How about you speak to an IFA and ask for a comparison? The answer will be different based on age, budget, type of endowment, length of premiums.

    If you'd like a comparison, you can message me. I represent almost all the insurers in Singapore.

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  • Loh Tat Tian
    Loh Tat Tian, Ex-Financial Advisor, Founder at Singapore Insurance Value Finding
    Level 6. Master
    Answered on 05 Apr 2019

    Best is always situational and ever changing. Products change, etc etc.

    Though Save3 from TIQ just came out with a crediting rating of 3%, 6 years lock in period (7th year can Consider to take out), and lumpsum premium helps you to save on the sales charge of 1.2%.

    Their Elastiq gives 2.02% with lock in period of 3 months, minimum $5k.

    Other Endowments with 10 year lock In period typically can give yield of 2.5% up to 3% depending on RB, TB etc.

    So shop around.

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  • Henry Hoe Yong Zhi
    Henry Hoe Yong Zhi, Co-founder at Cantley Lifecare Pte Ltd
    Level 3. Wonderkid
    Answered on 19 Mar 2019

    I recommend not buying endowment plan and opt for fixed deposits with a bank instead. Fixed deposits hold your money for 6 months to 3 years. Once the period of fixed deposit is over, you can deposit the rest in again to roll over the interest year after year and when added up, the returns is almost similar to an endowment insurance. You also have much shorter locked in period. Let's say you deposit your money for 12 months, and touch wood something unfortunate happens and you require that money, you only need to borrow for a short period of time, which you can do so with credit card balance transfers and cashlines(which have low interest rates) and then repay all of them once your fixed deposits are returned to you. You also have the choice of forfeiting the fixed deposit for no interest.

    Endowment plan on the other end usually lock you in for 10 years and only give you a fixed returns, which if calculated to annual interest rate, is only slightly higher than fixed deposits. There is no liquidity in endowment plans at all, which means if you cancel the plan midway should you require the money, you will forfeit a sum of the premiums as penalty. The benefit of endowment plan however, is that it has the insurance element to it that covers death, terminal illness and permanent disability. You can treat endowment plans as a term insurance with a forced savings element.

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    • Hariz Arthur Maloy
      That's quite a lot of wrong info there buddy. Endowments can give quite a bit more than FD. Some of them are flexible too. Plus, if you really need money the next day, you should dip into your emergency savings instead of withdrawing from your investments. Next thing you open yourself up to with your strategy is reinvestment risk. You don't know if every year FD rates will drop or increase. With an endowment, you know what you're getting ahead of time, you have smoothing of bonuses and have a high chance of getting the projected values. There are flexible endowments as well, providing you cash back every year that you can withdraw from or keep with the insurance company to reinvest. The additional coverage of an endowment that pays when you pass away is usually only 5% more than what you paid. It's barely anything. So they aren't a term plan replacement at all.
      19 Mar 2019
    • Loh Tat Tian
      Agree with Hariz. There are many issues I take with fixed deposits ROI. IRR is a better way to calculate.
      05 Apr 2019