An endowment saving plan is one of the many savings tools you can pick to achieve your financial objectives.
Your usual salary might not be enough. For example, these plans are excellent for getting married, sending your kids to uni, or planning a glamorous retirement. In urgent times, you might even need urgent cash from a reliable lender!
While some Singaporeans have considered robo advisors, they make use of savings accounts as well!
Types of Savings Plans
There are three types of savings plans to consider:
- Bank account
- Insurance endowment plan
- Insurance + investment
The first difference is that savings accounts allow you to withdraw cash whenever you want to, whereas liquidity is based on your plan’s maturity for the other two options.
Another point to consider is your risk.
Savings accounts are risk-free, and so are non-participating insurance endowment plans. By contrast, participating endowment plans and investment-linked insurance policies pose some risks because you’ll be investing.
Death coverage may be an essential factor for your choice too.
Savings accounts don’t offer this, but endowment plans and investment-linked policies do.
Lastly, consider your gains.
Savings accounts offer low returns, usually between 0.3% and 1.5%. By comparison, a short-term endowment plan provides 1.2-1.5% interest p.a. that isn’t affected by inflation. Lastly, an investment-link policy can offer the highest profit – but that’s just because you’re taking more risk.
Best Endowment Saving Plans To Consider In Singapore
As you can see, an endowment saving plan is a worthwhile alternative to get more money. There are two categories of such solutions to consider:
Short-Term Endowment Saving Plans
Short-term options are best if you’re not ready to wait ten years to collect your payouts because they’re straightforward. Here’s what you can consider:
1. Great SP Series 5A
This plan comes courtesy of Great Eastern, a member of the OCBC Group. The conditions are excellent if you’re looking for very short-term tenures because:
- Your commitment is just for two years.
- The returns are 1.2% p.a. on maturity.
- You get coverage against Death and Total and Permanent Disability.
- The Complimentary Accidental Cover Booster is 500% the premium you paid.
- You can buy the plan online.
- You don’t need any previous medical assessment.
- You can withdraw liquidity at the end of each year or reinvest it.
On the downside, Great SP Series 5A is Series 4A rebooted with a smaller return of 1.2% instead of 1.3% p.a. Also, you need $10,000 to start.
2. DBS SavvyEndowment 6
DBS Savvy Endowment 6 is another single-premium insurance endowment plan worth considering because:
- The policy term is just one year.
- The coverage for death benefit is 101% of the single premium.
- You only need $5,000 to start, and you can apply online using either cash or SRS.
- There’s a $50 cash reward you can grab if you’re using your SRS funds. However, the promotion is only valid until the end of January 2022.
- The returns are 1.10% p.a. upon maturity.
- You can recover your capital when your policy term finishes.
- You don’t need any medical check-ups to apply.
- You can apply online, and your details will be pre-filled if you’re using digibank.
On the downside, this plan is just for Singapore citizens and Permanent Residents. Also, if you’re sticking to the one-year program, you’ll only get $10,105 guaranteed plus another $5 (non-guaranteed maturity bonus) from a $10,000 initial deposit.
However, remember that the DBS Savvy Endowment 6 is a non-participating endowment saving plan.
3. Manulife Goal 7
Manulife Goal 7 is a three-year endowment saving plan, so it’s best if you’re saving to replace an ageing car or for retirement. Here are the advantages:
- You can receive payouts at the end of the first and second years. The sum you’ll receive is 1.39% of your single premium after one year and 2.78% after two years.
- This plan is very flexible because you can either use the guaranteed redraw or keep your money and accumulate your funds.
- The death coverage is pretty good at 101% of your single premium.
- You get 100% of your capital back when your policy matures.
- If your policy reaches maturity, there are even some possible bonuses of 1.39% of your single premium.
For a $50,000 single premium, if you choose to accumulate your yearly income, Manulife Goal 7 offers you:
- $1421 earned yearly income
- $695 potential maturity bonus.
Mid and Long-Term Endowment Saving Plans
If you’re saving for a long-term goal, such as your children’s university or your retirement, consider this type of endowment saving plan.
4. AXA EarlySaver Plus
The EarlySaver Plus from AXA is a flexible endowment saving plan that you can use both for the mid and long-term. As such:
- You can choose premium payment tenures of five or ten years.
- You get guaranteed cash payouts during the last three years of your policy. Of course, you can choose to reinvest the first and second payout to get more money upon maturity.
- The guaranteed interest rate is 1.57% p.a. during the last three years, but it can reach up to 4.75% p.a. (non-guaranteed).
- The policy term is 10-25 years.
- You can get extra payouts for outpatient medical costs of a maximum of $200/ claim.
- There’s an extra 50% payout for accidental death.
On the downside, you don’t have an option for early cash withdrawal and your capital isn’t guaranteed.
This long-term insurance savings plan offers:
- Up to 4.75% p.a. non-guaranteed returns
- Premium terms of 5. 20, or 25 years
- Policy terms of 15, 20, and 25 years
You can receive:
- Your maturity benefit in one lump sum payout after maturity.
- Yearly cash benefits after the second year or defer those payments, so they accumulate towards the annual interest.
On the downside, you need medical check-ups for this plan, and your capital isn’t guaranteed.
In Conclusion: Why Get An Endowment Saving Plan?
As you can see, an endowment saving plan is an excellent solution to achieve your financial objectives in the medium to long run.
Imagine these financial solutions like imposed savings that allow you to receive payouts depending on your initial deposits to reach your financial goals. Another point in this solution’s favour is its insurance coverage.
Unfortunately, problems may arise.
For example, an emergency may prevent you from paying your installments, or you may need urgent liquidity.
If that happens, don’t cash out your endowment saving plan; that will lead to losing your interest.