Finance

3 Misconceptions Most Singaporeans Have About Endowment Plans.

Data Science Dream Team

As an economically active Singaporean, you would constantly think of the future. You might wonder just how you are going to save for your child’s higher studies or whether you have enough money to purchase your own home 10 years from now. Well, this is where endowment plans can help!

Endowment plans are savings instruments that also come along with insurance coverage. Offering capital guaranteed at maturity, these plans also secure you in case of any unforeseen events. While keeping your financial gains secure from the volatile market, these plans also grow your money and help you achieve all your financial goals.

Some of the better plans also come with rider options that offer protection against critical illnesses, total and permanent disability or death. Should any of these unfortunate events strike, all future premiums of your plan will be waived off.

With so many accompanying benefits, an endowment insurance plan is a must-have financial tool for all Singaporeans. However, there are several misconceptions that causes people to avoid endowment plans altogether. Today, we look at 3 of these misconceptions about endowment plans and reveal the facts behind them.

Misconception 1: Endowment plans are volatile in nature

Fact: Endowment plans are not at all volatile. In fact, they are one of the most secure and steady forms of investment that you can choose. Through these plans, you can save your money for a fixed duration of time and get guaranteed returns upon maturity. So, an endowment plan can actually be one of the best ways to save money for your future needs, such as your child’s college studies.

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Misconception 2: Endowment plans do not offer good returns

Fact: Quite the contrary, endowment plans are known to offer really good returns on your investment. For example, if we consider an endowment plan monthly investment of $1000 paid for 9 years, you can expect returns of around $161,774 when calculated at a rate of return on investment of 4.75% per annum. Thus, your money does grow exponentially.  Even at a base rate per annum, you still get great returns.

Misconception 3: Endowment plans do not offer flexibility

Fact: Endowment plans offer a wide range of terms for premium payment. You can choose a term from anywhere between 5 to 30 years. You can also customize the actual policy term to last anywhere between 10 to 30 years. Additionally, you may also add riders to your plan. One of the best riders allows for premiums to get waived for a certain period if the policyholder is diagnosed with a pre-listed medical condition. These benefits stand testimony to the flexibility of endowment plans.

To round up, if you are looking for the perfect way to close any gaps in your savings, then an endowment plan is one of your best options. These plans act as a sort of forced savings, ensuring you put away money every month to build a sizeable corpus over time. They also put your money to work, promising a payout much higher than your total investment.

Another plus point about endowments is the sheer number of options you can choose from. If you are looking for safe yet steady returns, you could opt for a non-participating endowment plan. However, if you are looking for higher returns and do no might an element of risk, there are also several participating endowment plans you could go for.

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We hope this article has helped clear the air around endowment plans and furthered your understanding of these extremely helpful savings instruments. Good luck and all the best!

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