With rising inflation and living costs, effective financial planning is more crucial than ever. UOB’s Asean Consumer Sentiment Study 2024 highlights that Gen Zs are the least financially prepared, emphasizing the importance of disciplined savings, emergency funds, and insurance.
In Singapore, endowment plans offer a balance of savings and insurance protection, allowing individuals to accumulate a lump sum while ensuring financial security. These plans provide steady growth with lower risk, making them ideal for long-term goals like retirement or education funding.
This article covers key features to help you select the best endowment plan in Singapore.
1. Singlife Choice Saver: Best for Capital-Guaranteed Savings with Bonuses
Singlife Choice Saver offers a savings plan with up to 4.25% p.a. non-guaranteed returns, while ensuring that 100% of your capital is guaranteed upon maturity. This plan provides flexibility in both premium payment terms and policy durations, making it a great option for long-term financial goals.
- Interest rate: Up to 4.25% p.a. non-guaranteed returns
- Premium term: 5, 10, 12, 15, 18, 20, or 25 years
- Policy term: 10 to 25 years, or coverage up to 99 years old
- Withdrawal/payouts: 100% capital guaranteed at maturity; no early cash withdrawal option
Pros:
- Capital guaranteed upon maturity
- Flexible premium and policy terms
- No medical check-up required
- Potential for non-guaranteed bonuses
- Option to change Life Assured to suit family needs
- Add-on riders available for extra protection (e.g., critical illness)
Cons:
- No option for early cash withdrawal
- Non-guaranteed bonuses depend on investment performance
2. Manulife ReadyBuilder II: Long-term Wealth with Flexible Premium Payment and Withdrawal
Manulife ReadyBuilder II is a savings plan offering lifelong wealth accumulation with the flexibility to pause premium payments or make withdrawals. It allows policyholders to assign a loved one as the secondary life insured, extending the wealth-building horizon up to age 120.
- Interest rate: Up to 4.25% p.a.
- Premium term: 5, 10, 15, 20 years, or a single premium option
- Policy term: Up to age 120
- Withdrawal/payouts: Unlimited withdrawals from the policy’s cash value whenever available; policyholder can pause premium payments for up to a year without penalty
Pros:
- Lifelong wealth accumulation up to age 120
- Flexible withdrawal options from the policy’s cash value
- Premium payment pause option in times of financial need
- Retrenchment benefit: 50% of annual premium as a lump sum
- Waiver of premiums in case of total and permanent disability
- No medical check-up required for application
Cons:
- Surrendering the policy before the 15th year may result in financial loss
- Premium payments need to be maintained for optimal cash value growth
3. China Taiping i-Saver 8: Best for Short-Term Savings with Guaranteed Capital
China Taiping i-Saver 8 is an 8-year savings plan requiring only 2 years of premium payments. It offers capital protection with up to 3.13% p.a. returns at maturity. Additionally, the plan provides a death benefit, ensuring financial security for your loved ones, while being easy to apply with no medical check-up required.
- Interest rate: Up to 3.13% p.a. upon maturity (non-guaranteed bonus included)
- Premium term: 2 years
- Policy term: 8 years
- Withdrawal/payouts: Guaranteed capital at maturity; non-guaranteed bonus upon maturity; no early withdrawal options
Pros:
- Short premium payment term (only 2 years)
- Capital guaranteed upon maturity
- Attractive returns of up to 3.13% p.a.
- Death benefit protection (105% of total yearly premiums + non-guaranteed bonus)
- No medical check-up required for application
Cons:
- No early withdrawal option
- Non-guaranteed bonuses subject to investment performance
4. Income Gro Retire Flex Pro: Best for Flexible Retirement Payouts with Protection
Income Gro Retire Flex Pro is designed for those planning for retirement, offering flexibility in receiving monthly cash payouts or accumulating them at an interest rate of up to 3.00% p.a. The plan also provides coverage for death and terminal illness, as well as additional benefits for accidental death and disability. It offers guaranteed acceptance, regardless of health conditions, making it an accessible choice for retirees.
- Interest rate: Up to 3.00% p.a. for accumulated payouts
- Premium term: Flexible premium payments
- Policy term: Flexible, based on desired retirement age and payout schedule
- Withdrawal/payouts: Monthly cash payouts with the option to accumulate at 3.00% p.a.; coverage for death, terminal illness, accidental death, and disability
Pros:
- Flexible monthly cash payouts
- Accumulate payouts with a 3.00% p.a. interest rate
- Guaranteed acceptance, no medical check-up required
- Additional coverage for accidental death and disability
- Retrenchment benefit available
Cons:
- Non-guaranteed maturity bonus depend on investment performance
- Early withdrawal may result in reduced benefits
Comparison of the Best Endowment Plans
When choosing the right endowment plan, it’s important to compare key factors like premium terms, interest rates, and policy duration. In this section, we provide a side-by-side comparison of the top endowment plans available in Singapore for 2024.
At a Glance
| Endowment Plan | Premium Term | Interest Rate (per annum) | Policy Term | Is the Capital Guaranteed (upon maturity) |
|---|---|---|---|---|
| Singlife Choice Saver | 5, 10, 12, 15, 18, 20, or 25 years | Up to 4.25% (non-guaranteed) | 10 to 25 years, or up to 99 years old | Yes |
| Manulife ReadyBuilder II | 5, 10, 15, 20 years, or single premium | Up to 4.25% | Up to age 120 | Yes |
| China Taiping i-Saver 8 | 2 years | Up to 3.13% (non-guaranteed) | 8 years | Yes |
| Income Gro Retire Flex Pro | Flexible premium payments | Up to 3.00% (for accumulated payouts) | Flexible, based on retirement age | No |
- Best Overall for Flexibility & Long-Term Wealth: Manulife ReadyBuilder II
- Best for Short-Term Savings: China Taiping i-Saver 8
- Best for Capital-Guaranteed Savings with Bonuses: Singlife Choice Saver
- Best for Retirement Payout Flexibility: Income Gro Retire Flex Pro
If you want long-term flexibility and wealth accumulation, Manulife ReadyBuilder II is likely the best overall option due to its range of premium terms, ability to pause payments, and wealth-building features.
However, for shorter commitments or specific retirement goals, China Taiping i-Saver 8 and Income Gro Retire Flex Pro are strong alternatives.
Good to Know
What Is an Endowment Plan?
An endowment plan is a savings-focused life insurance policy that offers both savings growth and coverage. By paying regular premiums, policyholders build up a lump-sum payout over time, which is paid out at the end of the policy term. These plans also provide insurance protection, typically covering death, total permanent disability, or critical illness, making them a bundled product with higher premiums.
Short-Term vs Long-Term Endowment Plans
When deciding between short-term and long-term endowment plans, it’s essential to understand how each option aligns with your financial goals and the level of commitment you can manage. Both serve as a hybrid between savings and insurance but differ significantly in their structures and benefits.
| Feature | Short-Term Endowment Plans | Long-Term Endowment Plans |
|---|---|---|
| Duration and Commitment | 2 to 6 years. Early withdrawals may lead to losses. | 10 to 25 years. Early termination could result in penalties. |
| Best For | Suitable for short-term goals, like saving for a vacation or purchasing a vehicle | Best for long-term goals, such as retirement or funding a child’s education. |
| Returns | Guaranteed capital return with modest returns. | Potential for higher returns with both guaranteed and non-guaranteed components. |
| Risk | Low-risk investment with the added benefit of minor insurance coverage. | Non-guaranteed returns carry some risk. |
| Insurance Coverage | Minimal coverage, typically for death or permanent disability. | More comprehensive, including critical illness and other benefits. |
| Flexibility vs Stability | More flexibility with shorter terms and quicker access to funds. | Less flexible but offers higher stability and potential for greater returns over time. |
Short-term endowment plans are ideal for those seeking immediate but modest returns with lower risk, while long-term endowment plans are suited for individuals committed to long-term savings and higher potential gains. Your choice depends on your financial goals, risk tolerance, and the flexibility you need over time.
Guaranteed vs Non-Guaranteed Benefits (Including Bonuses)
Endowment plans offer mix of guaranteed benefits, both of which are key in understanding your potential returns.
Guaranteed Benefits
Guaranteed benefits refer to the fixed payouts you’re promised at the end of the policy term, regardless of how the investments perform. This component gives policyholders assurance that they’ll receive a minimum amount, making it particularly attractive for risk-averse individuals.
Non-Guaranteed Benefits
On the other hand, non-guaranteed benefits, often paid in the form of bonuses, are dependent on the performance of the insurer’s participating fund. These bonuses, declared annually, may increase your total payout, but they fluctuate based on market conditions and investment performance.
There are two common types of bonuses:
- Reversionary bonuses which are added to your policy over time
- Terminal bonuses which are given at the end of the policy term
While non-guaranteed bonuses can boost your savings significantly, they are not assured, making it crucial to weigh both benefits when selecting an endowment plan.
Types of Endowment Plans in Singapore
When it comes to endowment plans in Singapore, there are various options designed to cater to different financial goals and savings needs. Below are the primary types of endowment plans available:
1. Regular Endowment Plans
Regular endowment plans are designed to help individuals accumulate savings over a long-term period, typically between 10 to 25 years. These plans combine insurance coverage with a disciplined savings structure, making them a popular choice for individuals looking to save for significant life milestones, such as their child’s education or retirement.
Regular endowment plans often offer a combination of guaranteed and non-guaranteed returns, with the guaranteed portion ensuring a minimum payout upon maturity.
Key Features:
- Long-term maturity (10 to 25 years)
- Guaranteed returns with potential non-guaranteed bonuses
- Insurance coverage for death or permanent disability
- Suitable for long-term financial goals like education or retirement
2. SRS-Endowment Plans
SRS (Supplementary Retirement Scheme) endowment plans are specifically designed to work in tandem with Singapore’s SRS, which is a voluntary scheme that encourages individuals to save for retirement while enjoying tax relief. Contributions to SRS accounts are tax-deferred, meaning individuals can enjoy tax benefits now while growing their retirement savings. However, early withdrawals are fully taxed and subject to a 5% penalty, making long-term commitment essential for maximizing benefits.
SRS-endowment plans are approved products that can be purchased using funds from an SRS account, allowing policyholders to accumulate wealth for retirement while reducing their taxable income.
Key Features:
- SRS-approved for tax benefits on contributions
- Tailored for retirement savings
- Offers both savings accumulation and insurance coverage
- Can be used to supplement CPF savings for retirement
Factors to Consider When Choosing an Endowment Plan
Selecting the right endowment plan requires careful consideration of several key factors, including the level of security and flexibility it offers. Here’s what to keep in mind:
- Capital Guarantee: A capital guarantee ensures you’ll receive back your original investment by the end of the policy term, ideal for risk-averse individuals. Non-guaranteed returns, like bonuses, can boost your payout but depend on market conditions.
- Policy Term & Premiums: Endowment plans range from 2–25 years. Short-term plans offer quicker access to savings, while long-term plans suit retirement planning. Some plans, like Manulife ReadyBuilder II, provide flexible premiums and partial withdrawals.
- Payout Flexibility: Choose between monthly payouts for steady income or a lump sum at maturity for large expenses like home purchases or retirement.
- Additional Benefits: Plans may include premium waivers in case of disability and retrenchment benefits, providing financial security during difficult times.
- Payment Schedule: Opt for a single premium or regular payments (monthly, quarterly, or annually). Financial experts at DBS recommend maintaining a consistent income stream to regularly cover premium payments, thus minimizing the risk of having to prematurely surrender your policy.
- Total Distribution Cost: This fee covers advisor and distribution costs. Be mindful to avoid overpaying for limited added value.
- Limited Pay Period: Some endowment plans only require you to pay premiums for a few years but provide lifetime coverage, ideal for long-term protection without long-term payments.
- Accumulated Bonuses: Reversionary and terminal bonuses can increase your payout but are non-guaranteed and depend on investment performance.
Benefits of Endowment Plans
Endowment plans offer a range of benefits that make them an attractive choice for long-term financial planning. They not only help you save for specific life goals but also provide guaranteed payouts and additional coverage for unforeseen events.
Here are some key advantages of endowment plans to consider.
- Long-term savings for specific goals: Ideal for accumulating funds for education, retirement, or large purchases.
- Guaranteed payout upon maturity: Enjoy a secure lump-sum payout at the end of the policy term, with potential bonuses based on investment performance.
- Additional coverage: Provides financial protection with coverage for death, terminal illness, or permanent disability, ensuring peace of mind for you and your family.
Things to Watch Out for Before Buying an Endowment Plan
- Surrender Value: Early policy termination may result in a payout lower than premiums paid, including both guaranteed and non-guaranteed components. Additionally, early withdrawal penalties can lead to the loss of bonuses and a lower payout.
- Premium Payment Terms: Ensure the premium schedule fits your financial goals and capabilities, as missing payments may impact your returns.
- Tax Implications: Consider the tax benefits of SRS-approved plans, which can offer tax relief and more favorable tax treatment during withdrawals.
Closing
Endowment plans can be a valuable tool for long-term financial security, offering both savings growth and insurance coverage. By carefully selecting a plan that aligns with your goals and understanding the key factors, you can make a well-informed decision. Ultimately, the right endowment plan can help you achieve important milestones while protecting your financial future.
Key Takeaways:
- Manulife ReadyBuilder II stands out for its long-term wealth accumulation, offering flexible premium payment options and the ability to pause payments or make withdrawals, making it ideal for those seeking flexible, lifelong financial planning.
- China Taiping i-Saver 8 is an excellent choice for short-term savings with only 2 years of premium payments and guaranteed capital upon maturity, providing a quick and secure way to build funds.
- Singlife Choice Saver provides up to 4.25% p.a. non-guaranteed returns, with 100% capital guaranteed at maturity, making it suitable for risk-averse individuals aiming for long-term financial goals.
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