7 Best Short-term Endowment Plans in Singapore
Endowment plans are offered by some insurers in Singapore. Unlike their other insurance products, these endowment plans are short-term and is designed to grow your savings.
With inflation, low bank savings accounts, short-term endowment plans have been formed. They are another alternative to savings plans that have 0.05% interest rates in Singapore. A short-term endowment plan is a great way to save for your future. They offer a competitive fixed rate of return, and you can withdraw your money at any time. Endowment plans are either short or long-term.
Short-term endowment plans typically have a tenure of 5 years or less, while long-term endowment plans have a tenure of 10 years or more. In this article, we look at the best short-term endowment plans in Singapore. If you are looking at putting your money in short endowment plans here is everything you can expect.
What Is An Endowment Plan?
An endowment plan is a whole life insurance plan with a saving or investment component. Some of the insurances offer endowment policies as part of the whole life insurance plan while other offer insurance plans that are investment-linked. An endowment plan is considered a savings plan as it offers the investment or savings component, unlike the old protection plans.
Short endowment plans have the following features
- You get your capital back at the end of the policy period
- Maturity period of between 3 to 6 years
- Best for saving towards a milestone such as a wedding.
What are the terms you should know when applying for an endowment plan?
A premium is a payment you make regularly towards the endowment policy.
2. Policy term
This is the plan’s maturity period. A short-term endowment policy has a policy term of up to 6 years.
3. Cash benefit guaranteed after maturity
The cash or capital benefit guaranteed after maturity is the amount you will receive from the insurance.
4. Maturity benefit
Maturity benefit is how much your investment has grown. It’s either guaranteed or non-guaranteed.
5. Insurance coverage
Insurance coverage is the scope that the policy cover. It includes death, terminal illness, and total and permanent disability.
6. Participating or non-participating
Insurers usually put the money in endowment funds in investment funds. When the funds perform well you will receive a share of the profit which is the non-guaranteed return from the policy.
Short-term endowment policies are best for people looking for:
- A savings or investment plan with guaranteed life protection
- Mandatory savings plan with benefits
- Stability and peace of mind
How Does An Endowment Policy work?
The endowment plan is the perfect way to build financial savings discipline. With an endowment plan, you pay monthly premiums for a certain period of time. For example, you have an endowment policy with a premium of $250. Out of this $100 will go to the protection plan while the $150 is for saving or investment.
You will contribute to the policy for a period of time as specified in the policy. At maturity, you will be entitled to a lump sum of money on surrender of the policy. Some of the main features of the endowment policy are as below:
|1. Coverage||Endowment policy cover death, and terminal illness and may even cover the total and permanent disability. Depending on the type of endowment policy you can receive part of the money once the policy acquires cash value.|
|2. Payout assured||In the event of death or terminal illness, the policy pays out all the premiums paid and accumulated bonus to the beneficiary.|
|3. Guaranteed cash value||The guaranteed cash value is the amount your policy accumulated during its life. Such amounts include the maturity value of the policy.|
|4. Non-guaranteed cash bonus||These are bonuses that are determined by various market factors. There is no guarantee that you will receive the money but rather a decision is made on the maturity of the policy.|
Best Short-term Endowment Plans In Singapore
If you are looking at investing your money, here are short-term endowment policies you should consider. These short-term endowment plans are also suitable for those who have just started working or are newbies in finance. There are decent returns and it has a low commitment level. At the core, these are savings plans that can help you hit your financial target at an earlier date.
GREAT SP Series 7 (Great Eastern)
The great SP series 7 is a short-term endowment plan with one of the best features. It guarantees you a return of 2.30% p.a for two years.
Other features of this endowment plan include the following:
- Death, total and permanent disability cover 105% of the premiums or surrender value (whichever is higher)
- It’s a non-participating policy with guaranteed returns of 2.30%
- A minimum contribution of $10,000 when applying for this policy.
DBS Savvy Endowment 4 (DBS)
The DBS Savvy short-term endowment plan is perfect for short-term gains. The DBS has partnered with manual life insurance to underwrite an endowment policy with the following features:
- Minimum premium of $5,000
- A policy tenure of 3 years with 101% death benefit
- DBS savvy endowment plan is a participating plan. The benefits are split between guaranteed and non-guaranteed bonuses
Manulife Goal 7 (Manulife)
Manual life goal is ideal for those who wish to commit their cash for a short period of time and earn a profit. The main features of manual life goal 7 are as follows
- Single minimum premium of $10,000
- A policy term of one year, during which you are insured 101% of the premium in the event of death.
- Guaranteed capital return of 1.1% upon maturity
LIC Secure Growth 2
The life insurance corporation offers a short endowment policy with the following features
- A minimum single premium of $20,000 and up to $150,000
- A policy term of up to 3 years with a death benefit of 101.12% -101.22% plus an additional 10% to cover 1st-year accidental total disability or death.
- A guaranteed gain of 1.12% for single premiums of $20,000 to 445,000. For premiums starting from $50,000 to $150,000 you will receive a guaranteed gain of 1.22%.
LIC Wealth Plus 6
The life insurance corporation offers another short-term endowment plan which runs up to 5 years. LIC wealth plus 6 has the following features
- Minimum premiums of S$20,000 and a maximum of $150,000
- Policy term of 5 years with a death benefit and 1.25 to 1.25% interest
- You will receive a guaranteed profit of 1.2% for single premiums of S$ 20,000 to S$ 45,000. Premium above S$ 50,000 up to 200,000 earn you a profit of 1.25% per year.
Etiqa Tiq 3-year Endowment Plan
Etiqa Tig 3 is a non-participating endowment plan. Anyone aged 17 -70 years can apply for the policy. The policy has the following main features
- Minimum premium of S$ 10,000 and a maximum premium size of S$ 100,000
- Policy term of 3 years and insures you 101% of the premium in the event of death
- Guaranteed return of 2.30% at maturity
NTUC Income Gro Capital Ease
NTUC income is the perfect endowment plan for those looking to save money for huge purchases. The Gro capital ease offer guaranteed returns and has the following features
- Guaranteed maturity benefits of 104.51 of the single premium. A yield of 1.48% p.a for three years
- Policy term of three years
- Covers death, total and permanent disability
- Minimum premium of S$ 5,000 and a maximum single premium of S$ 200,000
Factors To Consider When Choosing A Short-term Endowment Plan
It is best to take your time and research short-term endowment plans before committing to one. Before you settle on an endowment policy there are important factors you should consider. Here are the most important considerations.
1. Guarantee capital
Pick an endowment policy that guarantees the safety of your investment. Guaranteed payment will ensure you receive your capital back which should be more than the total premiums contributed during the life of the policy.
2. Limited pay period
The limited pay period means you will pay the premiums for a number of years in exchange for coverage
3. Surrender value
Consider the cash back you will receive when the policy matures. Look out for the guaranteed and non-guaranteed cash back you are likely to receive at the end of the policy life. Most insurers express the guaranteed and non-guaranteed components in % terms.
4. Accumulated bonuses
Accumulated bonuses increase the total sum assured. The bonuses are not guaranteed and are added after the maturity of your policy.
5. Policy benefits and coverage
Consider your needs and choose a policy that provides you with the benefits you require. Before you take out a policy check the benefits and coverage on offer.
Consider what you want to achieve and choose a policy that will help you achieve your financial goals. Select a plan that offers you the best returns within the period you intend to achieve your goals.
Is A Short-term Endowment Plan Right For You?
The popular short-term endowment savings plan is fairly attractive as compared to savings accounts and fixed deposits. At some points, endowment plans can even be more profitable than the Singapore Savings Bonds (SSB).
Having an extra pool of savings or a source of passive income is important in today’s world. To counter inflation, you will need money from different sources.
While it is a plan that is usually less than 5 years, it is still a form of financial commitment. Only park the cash that you do not need into this plan. Just like other insurance plans, you will lose your money if you were to terminate the plan early.