Asked 3w ago
Overall, your money is invested into the insurer's participating fund. Accordingly, the insurer's track record and capability will determine whether the fund is able to give you the promised rate of return.
One way to acheive this is through smoothing of bonuses:
For instance, the insurer may keep some of the returns during the good years to make up for the shortfall during the poor performing years. This is with the intention of maintaining a stable rate of returns over time.
Therefore, it is not necessarily true that buying an endowment policy during an economic return will definitely lead to a lower rate of return. Instead, we have to widen our perspective and look at the situation from a broader view over the long-term.
I share quality content on estate planning and financial planning here.