Best Endowment Plan in Singapore: Everything You Need to Know Before Getting One (2024)

Searching for the best endowment plan in Singapore to invest in?

Singapore’s average personal savings rate stood at an impressive 37.6% in the first quarter of 2023, underlining the country’s strong focus on financial security and wealth accumulation.

In this article, I will discuss the intricacies of endowment plans available in Singapore, from how these plans operate to emphasising critical components such as coverage, premiums, and maturity benefits.

Whether you’re considering a short-term endowment plan Singapore or a single premium endowment plan Singapore, this article aims to provide comprehensive guidance on making your first endowment plan purchase.

Endowment Plan Explained: What is it?

It can be defined as a hybrid of a life insurance policy and a savings scheme that focuses on three elements: protection, investments and savings.

These combined plans are frequently utilised to accumulate funds for various financial objectives, such as funding your children’s education or securing your retirement.

Additionally, endowment plans, whether short-term or single-premium, offer fundamental life insurance coverage throughout the duration of the policy.

How Endowment Plan Works?

Before you decide to get an endowment plan, learning exactly what it is first is a good idea.

1. Endowment for Investments

When you contribute premiums to an endowment plan, the insurance company invests them in various financial products to generate higher returns.

A typical endowment plan usually comprises guaranteed and non-guaranteed returns. Paying attention to both is crucial, as financial advisors might focus solely on the non-guaranteed part.

Guaranteed Return:

This is the portion of the policy that the insurance company must pay back to you, irrespective of how the investment portfolio performs.

As a general rule of thumb, the higher the guaranteed portions, the lower the investment risks for the insurance company.

However, in some cases, the guaranteed portion might be less than the premiums you’ve paid.

Non-Guaranteed Returns:

This is the extra return you might receive if the investment portfolio performs well.

The benefit illustration usually pegs return rates at 3.25% and 4.75%, which is standard across the industry.

Two important points to consider here:

• These figures do not necessarily represent the insurance company’s targets. They just indicate what you’ll receive if the participating fund achieves those returns.
• Actual returns shown in your benefit illustration may differ from the 3.25% or 4.75% rates.

Note: The portfolio return does not equal your actual returns, which are often lower.

2. Endowment for Savings

Many financial advisors promote endowment plans as a way to save money. They often describe it as “forced savings” when they talk about it.

With an endowment plan, you typically make regular contributions to the plan for a set period of time. For instance, you might put in S$ 3,000 each year for 10 years, or there are plans where you pay a lump sum at the beginning.

The time you contribute might not match the time it takes for your plan to mature: You could be making payments for 10 years and then have to keep the policy for another 10 years before it’s fully matured, making it a total of 20 years.

People often use endowment plans when they have specific financial goals in mind. For example, someone who’s 45 and wants to save for retirement might choose a 20-year plan that pays out when they turn 65.

Types of Endowment Plans for Savings:

There are two types of endowment and savings policies: Limited Premium and Regular Premium.

Regular Premium Policy:

This is a straightforward traditional endowment plan where premiums are paid throughout the policy term, typically matching the duration of the policy itself.

If you choose a 15-year premium and policy term, you save for the entire 15 years, and the policy matures at the end of the 15th year.

Limited Premium Policy:

This type makes payments for a set number of years, after which the funds accumulate and compound until maturity.

Premium terms range from 5 to 20 years, while the policy’s maturity spans 10 to 25 years.

3. Endowment for Protections

Endowment plans often come with an insurance feature.

These plans include a guaranteed sum paid out if the policyholder passes away or becomes permanently disabled. However, since endowment plans are primarily meant for long-term savings, using them for insurance coverage can be expensive.

Like any insurance policy, the cost of coverage varies based on factors such as the policyholder’s age, gender, and health status.

Is it similar to Investment-linked Policies (ILPs)?

ILPs, unlike endowment insurance policies, typically lack guaranteed values.

Here are the features of ILPs that make them different from endowment plans:

• Feature an investment component where a portion of the premiums is used to purchase units in investment funds.
• The value of an ILP depends on the performance of these funds, carrying higher risk. The good thing is that ILPs provide financial protection in a single product and offer potential investment returns.
• There are a variety of fund options catering to different investment objectives and risk appetites.

Choosing between an endowment plan and an ILP requires clarity on how each aligns with your financial goals and whether you can sustain the long-term costs.

Common Coverage of The Best Endowment Plan in Singapore

Coverage:

• Endowment policies typically offer extensive coverage, including death, terminal illness, and sometimes total and permanent disability (TPD) protection until the end of life.
• Policyholders can expect to receive some cash benefits from their endowment policies.
• Some policies allow annual withdrawals once the policy has accumulated cash value.
• Certain endowment plans, such as retirement savings plans, may include a non-guaranteed bonus and a guaranteed cash payout amount.

Payout assured and bonuses (upon death):

• In the event of death or terminal illness diagnosis, the policy typically pays out a benefit equivalent to 105% of the premiums paid until that point, along with any accumulated bonuses.
• The terminal illness benefit is paid as a lump sum as an extension of the death benefit.

Guaranteed cash value:

• This represents the assured amount of the policy, excluding any non-guaranteed bonuses accumulated over the policy’s duration.
• Upon maturity, policyholders are entitled to receive the maturity value, which comprises the guaranteed sum and all non-guaranteed bonuses for participating policies.

Non-guaranteed bonuses:

• Policyholders may receive non-guaranteed bonuses, which include reversionary bonuses and terminal bonuses, in addition to the guaranteed cash value.
• These bonuses are influenced by factors such as the performance of the investment fund, expenses incurred by the participating fund, and death or sickness claim payouts for policies participating in that fund.

Key Components of The Best Endowment Plan in Singapore

Premium Term

The premium term denotes the period over which you need to pay premiums for your endowment plan, where it varies with each policy from a few years to the entire plan duration.

Pay attention to the premium term because it directly influences your financial obligations and the plan’s affordability.

Coverage Period

This is the duration for which the endowment plan provides coverage.

This helps determine the length of time the policyholder is protected against specified risks.

Minimum Sum Insured

Basically, the minimum amount of coverage provided by the endowment plan.

This ensures that policyholders have a baseline level of protection against unforeseen events.

Flexibility

Endowment plans provide policyholders with flexibility regarding coverage.

They have the choice to add extra benefits or riders, such as partial or total disability riders, critical illness riders, accidental death riders, and others.

Although these riders impact the premiums to be paid, they broaden the extent of coverage available.

Tax Benefits

Another good feature is that endowment plans offer tax benefits.

Premiums paid and essential benefits like the sum assured and maturity income qualify for tax exemption.

What are The Best Short-term Endowment Plans in Singapore

1. GREAT SP Series 12

Coverage and Plan Policies:

• The GREAT SP Series 12 endowment plan from Great Eastern offers coverage against Death and Total and Permanent Disability.

Minimum Premium and Maturity Benefit:

• A single premium endowment plan Singapore with premium payment of S$10,000.
• Upon maturity, policyholders can expect guaranteed returns of 3.50% per annum.

Basic Information:

• The plan does not require a medical examination.
• It offers a short-term commitment of 2 years, providing flexibility and ease of access to funds.

Best Suited For:

• Ideal for individuals looking to grow their cash after setting aside emergency savings.
• Suitable for those seeking guaranteed returns and a short-term commitment.
• Beneficial for individuals aiming to achieve financial goals within a short timeframe.

2. Tiq 3-Year Endowment Plan

Coverage and Plan Policies:

• The Tiq 3-Year Endowment Plan offers coverage for a three-year period.
• Policyholders are insured for 101% of the premium amount in case of death during the policy term.

Minimum Premium and Maturity Benefit:

• The minimum premium required for the Tiq 3-Year Endowment Plan is S$5,000.
• Upon maturity after three years, policyholders receive a guaranteed return of up to 10.5% p.a.
• The maximum premium size allowed is S$1,000,000.

Specialties:

• Guaranteed maturity returns of 3.4% p.a.
• An additional 1.4% p.a. for eligible Tiq Insurance Plan holders, allowing for total guaranteed returns of up to 4.8% p.a.
• No limit to the number of policies that can be purchased.
• Available to Singapore residents (NRIC/FIN) and foreigners with a work permit/employment pass/social pass.

Who is it best for:

• The Tiq 3-Year Endowment Plan is suitable for individuals aged 17 to 70, regardless of their health condition.
• It is ideal for those seeking short-term, guaranteed returns on their savings.
• People looking for a flexible investment option with relatively low minimum premium requirements may find this plan attractive.

3. HSBC Life Online Endowment

Coverage and Plan Policies:

The HSBC Life Online Endowment provides coverage for death or terminal illness, with the sum assured set at 110% of the Single Premium endowment plan Singapore.

Minimum Premium and Maturity Benefit:

• A single premium endowment plan with a premium payment of S$10,000.
• The policy term spans three years, offering short-term protection and financial planning.

• Guaranteed maturity benefit ensures a return on investment with a guaranteed yield of 3.9% p.a.
• Policyholders can anticipate a lump sum payout at the end of the three-year term, providing a boost to their savings.

Specialities:

• Guaranteed returns offer stability and security, aligning with short-term financial goals.
• A simplified application process enhances convenience and accessibility for potential investors.

Best Suited For:

• Ideal for individuals planning for short-term financial objectives such as funding a child’s education, property purchase, or renovation projects.
• Those seeking guaranteed returns and a simplified investment process will find the HSBC Life Online Endowment suitable for their needs.

4. Manulife Goal 12

Coverage and Plan Policies:

• Manulife Goal 12 is a short-term endowment plan with a coverage period of two years.
• During the two-year policy term, policyholders are insured for 101% of the premium amount in case of death.

Minimum Premium and Maturity Benefit:

• The minimum premium required for Manulife Goal 12 is a single premium endowment plan in Singapore of S$10,000.
• Payment can be made via cash or SRS (Supplementary Retirement Scheme).
• Upon maturity, policyholders receive a guaranteed return of 5.07%.
• Additionally, there’s a potential maturity bonus of 0.61% of the single premium endowment plan in Singapore.

Specialties:

• Short-term commitment period of just two years.
• Guaranteed return of 5.07% upon maturity.
• Potential additional maturity bonus of 0.61% of the single premium.

Best Suited For:

• Individuals seeking a short-term commitment with a limited premium payment.
• Those looking for a guaranteed return with the potential for additional bonuses upon maturity.
• Investors interested in a straightforward endowment plan with a fixed maturity period.

5. AIA #Wealth Savvy

Coverage and Plan Policies:

• Withdrawal/Payouts: Endowment ends in 3 years, with a guaranteed return of 100% of capital plus returns earned
• Minimum Investment: S$5,000, up to a maximum of S$30,000 per transaction.
• Guaranteed Returns: 3% p.a.
• Surrender Charge: Applicable if terminated before maturity, resulting in a lesser surrender value than total premiums paid

Minimum Premium and Maturity Benefit:

• An affordable option for investors
  • High guaranteed return of up to 3% p.a. upon maturity
    • Possibility of earning up to 4.25% p.a. with qualifying plans under AIA Wealth Savvy Bundle Campaign (2.0) 2022

Specialities:

• Accessibility: One of the most accessible plans with a minimum investment of S$5,000
• High Guaranteed Return: Offers a guaranteed return of up to 3% p.a. upon maturity
• Bonus Campaign: Opportunity to earn up to 4.25% p.a. through AIA Wealth Savvy Bundle Campaign (2.0) 2022
• No Medical Examination: Online applications for the basic plan are accepted without the need for medical examinations.
• Death Coverage: Provides coverage against accidental death in the first policy year, with an additional 10% payout on top of the death benefit

Best Suited for:

• Investors looking for a relatively affordable investment option with a guaranteed return.
• Those seeking the convenience of online application without medical examinations
• Individuals interested in endowment plans offering coverage against death, including accidental death benefits.

What are The Best Mid or Long-term Endowment Plans in Singapore

1. Singlife Choice Saver

Coverage and Plan Policies:

• Singlife Choice Saver offers seven premium payment terms, providing flexibility in reaching financial goals.
• The plan guarantees 100% capital if held till maturity.
• Policyholders can choose premium terms ranging from 5 to 25 years and policy terms from 10 to 25 years or coverage until 99 years old.
• There is no option for early cash withdrawal, ensuring full capital protection till maturity.

Minimum Premium:

• Premium terms range from 5 to 25 years, allowing individuals to select a payment schedule that suits their financial situation.
• The plan offers competitive interest rates of up to 4.25% per annum on non-guaranteed returns.

Maturity Benefit:

• Upon maturity, policyholders receive a lump sum payout, guaranteeing the return of 100% of the capital.
• Potential bonuses may be earned upon maturity, although they are not guaranteed.

Specialities:

• Flexibility in premium and policy terms, catering to diverse financial needs.
• Full capital protection till maturity ensures security for policyholders.
• No medical check-ups required for application.
• Option to add-on riders for critical illness protection and more.
• Unique feature: Ability to change the Life Assured to suit policyholders’ or their family’s needs.

Who is it Best For:

• Individuals seeking flexibility in premium and policy terms.
• Those prioritising capital protection and guaranteed returns till maturity.
• Individuals interested in add-on riders for additional protection.

Downsides:

• Maturity bonuses are not guaranteed.
• No option for early cash withdrawal.

2. Tokio Marine Nest Egg (GIO Cashback)

Coverage and Plan Policies:

• Guaranteed acceptance and capital if held to maturity.
• Provides coverage against death, with a payout of 105% of total annual premiums paid, accumulated bonuses, and guaranteed yearly cash benefits plus interest in the event of death.
• Flexibility to withdraw guaranteed yearly payouts or reinvest them to earn interest.

Minimum Premium and Maturity Benefit:

• Premium terms of 5, 10, 15, or 20 years.
• Policy terms of 10, 15, 20, or 25 years.
• Guaranteed yearly cash benefits from the second policy year for eight or 10 years.
• 100% capital guaranteed when held till maturity.
• Guaranteed returns of up to 3.8% p.a. on a non-guaranteed basis.

Specialities:

• Wide range of premium payment terms, including a short five-year term.
• Liquidity is provided through yearly cash benefits, with the option to withdraw or reinvest.
• Capital is guaranteed upon policy maturity.
• No medical underwriting is required for purchase.

Who It’s Best For:

• Individuals seeking flexibility in premium payment terms.
• Those looking for guaranteed yearly cash benefits and liquidity options.
• Investors who are interested in capital protection and guaranteed returns.
• Individuals who prefer endowment plans with simplified underwriting processes.

Downsides:

• Addition of riders like the Cancer Waiver Rider or (Enhanced) Payer Benefit Rider may necessitate full underwriting.

3. GREAT Prime Rewards 3

Coverage and Plan Policies:

• The Great Eastern GREAT Prime Rewards 3 endowment plan offers coverage for retirement income.
• It provides an annual payout starting at the end of Policy Year 1, 4, or 6, depending on the selected plan.
• Additionally, the plan pays a lump-sum benefit upon completion of the policy term, death, terminal illness, or total and permanent disability.
• Policyholders can choose to purchase the policy with cash or CPF Supplementary Retirement Scheme (SRS) funds.

Minimum Premium and Maturity Benefit:

• A single premium endowment plan in Singapore, with policy terms of either 15 or 20 years.
• The plan offers guaranteed capital after 5 years, with the option to accumulate annual payouts at the prevailing interest rate and withdraw them at any time.
• Upon the policy term’s maturity, any accumulated annual payouts that were not withdrawn during the policy term will be paid out as a lump sum.
• The plan provides an annual payout period/term of 10, 15, 17, or 20 years.

Specialties:

• Guaranteed payouts each year, with the flexibility to choose from four payout terms.
• Capital is guaranteed after 5 years.
• Option to accumulate annual payouts at prevailing interest rates and withdraw them anytime.
• Annual payouts can be utilised to supplement income or retirement funds.

Best Suited For:

• Retirement income planning.
• Policyholders seeking guaranteed annual payouts with flexibility in payout terms.
• Individuals looking to secure their capital after 5 years.
• Those who want the option to accumulate and withdraw annual payouts as needed.

Downsides:

• Does not cover pre-existing conditions, critical illnesses, or hospitalisation.
• Higher entry cost, starting from S$10,000.
• Returns are not guaranteed and may fluctuate based on market conditions.

4. AXA EarlySaver Plus

Coverage and Plan Policies:

• Provides coverage against death, total and permanent disability (TPD), and terminal illness, ensuring a minimum payout of 101% of total premiums paid.
• Offers an additional 50% benefit if death occurs due to an accident.
• Includes reimbursement of certain outpatient medical expenses for added protection.

Minimum Premium and Maturity Benefits:

• Choose between premium payment terms of 5 or 10 years, allowing flexibility in premium payment.
• Offers guaranteed returns of up to 1.57% per annum.
• Guaranteed cash payouts in the last 3 policy years, with the option to reinvest the first two payouts for a lump sum at maturity.
• Benefit from a maturity value combining guaranteed returns with potential bonuses for a substantial end-of-term payout.
• Flexible policy term options range from 10 to 25 years or up to 99 years old.

Specialities:

• Flexible Saving Period: Tailor your saving period to match financial goals and affordability.
• Increased Protection Coverage: Beyond saving, gain increased protection coverage for unforeseen events.
• No Medical Underwriting: Simplified application process with guaranteed issuance upon application.

Best For:

The AXA EarlySaver Plus is ideal for individuals seeking flexible savings, protection and investment growth.

5. PRUFlexicash

Coverage and Plan Policies:

• PRUFlexicash offers protection coverage against Death, Total and Permanent Disability (TPD), and Terminal Illness, providing a lump sum payout of 100% of the sum assured plus any accumulated bonuses.
• Supplementary benefits such as Accident Assist and Early Stage Crisis Waiver are available for enhanced coverage.
• The plan allows for adaptability to life changes, enabling the purchase of a new plan without medical examination at significant life events like marriage or parenthood.

Minimum Premium and Maturity Benefit:

• Enjoy a Yearly Cash Benefit from the end of the second policy year, which can be used or accumulated with a non-guaranteed interest of 3% per annum.
• A lump sum maturity payout at the end of your chosen policy term.
• Policyholders have the flexibility to choose a policy term of 15, 20, or 25 years, catering to individual financial goals.

Specialities:

• PRUFlexicash stands out for its flexible policy terms and the financial security it provides through guaranteed and non-guaranteed benefits.
• Guaranteed acceptance with an easy application process with no health check-ups required, ensuring guaranteed acceptance.

Best For:

• PRUFlexicash is ideal for individuals seeking a long-term insurance savings plan with financial flexibility and comprehensive protection coverage.
• It suits those looking to save for future needs while enjoying the security of guaranteed and non-guaranteed benefits without the hassle of medical examinations during significant life events.

Conclusion

Understanding and comparing the best endowment plans in Singapore is essential for individuals seeking financial security and savings growth.

Whether you’re considering a short-term endowment plan, a single premium endowment plan in Singapore, or other innovative offerings like the FWD Endowment

For the DBS Savvy Endowment plan or the DBS Savvy Endowment Plan, thorough research and comparison are critical.

Disclaimer:

The information in this blog is intended for general informational purposes only and does not constitute professional financial or insurance advice. BizTech Community is not an affiliate of any of the companies or brands mentioned in the blog. Therefore, BizTech Community is not responsible for dissatisfaction with the author’s review or opinions expressed in the blog.

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