Singaporeans are looking for ways to secure their financial future. Singapore is a nation of investors, with more than half (52 percent) of the population over 16 having an investment.
One popular way of investing is endowment plans. There are a variety of endowment plans available in the market, but it can be challenging to decide which plan is right for you.
This article will compare the best short-term and long-term endowment plans in Singapore. It will also discuss the benefits of the best endowment plan Singapore and help you decide which one is right for you.
What are Endowment Plans?
An endowment plan is an investment that combines life insurance and savings. You make regular payments to the policy, and in return, you receive a lump sum payout upon maturity. Here's how it works in Singapore
- You choose a policy with a fixed sum assured
- You make regular payments for a specific number of years (usually ten)
- At the end of the policy, you receive the sum assured plus any accrued bonuses
Benefits of Investing in an Endowment Plan
There are several benefits to investing in an endowment plan, including:
1) Tax Benefits
You can deduct the premiums you pay to an endowment plan from your taxable income. It reduces your tax load and frees up more money to invest. It is good to consult an accountant to see how much you can save.
2) Death Benefit
If you die before the maturity of your policy, your beneficiary will receive the investment together with the bonus. It is a way to secure your family's future in the event of death.
3) Maturity Benefit
When you reach the maturity of your policy, you receive a lump-sum payment that can be used for various purposes, such as retirement or funding your child's education.
You can choose to pay your premiums monthly, quarterly, or annually. You can also purchase a policy for as short as five years or as long as 30 years.
This flexibility allows you to tailor the policy to your specific needs and goals.
If you need cash before the maturity of your policy, you can surrender it. You will receive the entire payment immediately. It is a great way to access funds in case of an emergency.
Types of Endowment Plans in Singapore
Most endowment plans typically project non-guaranteed returns of 3.25 percent and 4.75 percent. The Monetary Authority of Singapore sets these figures, and the returns may be higher or lower, depending on the performance of the underlying investment.
There are two types of endowment plans in Singapore:
a) Short-term Endowment Plan
This type of plan is designed for investors who want to receive the payout within a few years. The minimum policy tenure is usually five years, and you can receive the payout after five years.
The best endowment plan in Singapore works for investors who want to save for a specific goal, such as a down payment on a home or car.
Some types of short-term endowment plans include:
- Savings Plan
It is a short-term endowment plan that offers guaranteed returns. It is the best choice for investors who want a safe and secure investment.
- Unit Linked Plan
It is an endowment plan that offers the potential for higher returns. The investment is divided into units, and the value of each unit will fluctuate with the market. It is an excellent choice for investors who prefer a more aggressive investment.
- Bancassurance Plan
Banks often sell insurance policies, including endowment plans. It is an excellent idea for investors who prefer to deal with a bank instead of an insurance company.
b) Long-term Endowment Plan
This type of plan works best for people who want to receive the payout after several years. The minimum policy tenure is ten years. You can get the entire amount after the tenure.
A long-term endowment plan is an excellent option for investors who want to save for retirement or their child's education.
Some types of long-term endowment plans include:
- Whole Life Plan
It is a long-term endowment plan that covers you for your entire life. It is an excellent choice for investors who want to ensure that their family is taken care of in the event of death.
- Endowment Plus Plan
It is a long-term plan that offers additional coverage for critical illnesses. If you are diagnosed with any of the diseases listed in the policy, you will receive the sum along with the bonus. It is an excellent choice for investors who want additional security.
Endowment plans in Singapore are a great way to save for your short-term and long-term goals. They are flexible, and you can choose the one that best fits your needs.