Banks in Singapore are known for low savings interest rates, 0.05%. With inflation and a much higher cost of living, Singaporeans are looking for alternatives to park their money. As savings accounts and fixed deposit accounts don’t offer attractive rates, short-term endowment plans, and even mid to long-term endowment plans have caught people’s attention.
Instead of lifelong insurance or savings plans, there is a new type of financial product that allows you to reap your rewards sooner. There are a few different types you can choose from when it comes to endowment plans.
Prior to this, endowment plans are often used by parents who will save up for their child’s education or for their retirement. Today, there is an updated version known as the short-term endowment plan.
One of the most popular is the short-term endowment plan, as it has a shorter maturity period, making it ideal for those who want to have some assurance that their money will be there when they need it.
Due to the new low bank interest rates, you and your friends might be interested in short-term endowment products. These short-term products have a low commitment level, simpler mechanics and manageable returns. Doing the math, it might be a more lucrative alternative as compared to savings accounts or fixed deposits.
While short-term endowment plans are managed by insurers, “increasing your savings” is at the very core of this financial product. You pay for the premium, wait for your money to mature and then withdraw out the money. The policyholder makes regular payments into the program, and when the term comes to an end, they will receive a lump-sum compensation.
You can use the payout for anything, such as buying a house or paying for you/your child’s university. This lump sum is going to help.
There are three types of endowment plans:
1. Short-term endowment plans
Have a term of five years or less. These plans are ideal for those who want coverage for a short period, such as when their children are young.
2. Medium-term endowment plans
They have a term of six to ten years and are ideal for those who want coverage for a more extended time, such as when their children are in college.
3. Long-term endowment plans
Have a term of eleven years or more. And they are absolute for those who want coverage for a very long period, such as when they are retired.
You might want to apply for an endowment plan for many reasons. Having a large payout at the end of the journey is can be helpful for big-ticket purchases. Some of the most common causes include:
If you have a short-term goal, such as buying a car or going on a vacation, an endowment plan can help you save for it. The money you pour into the program will grow over time, and you will get a tangible payment that you can use for your short-term goal.
The endowment plan is a great way to save for your long-term goals. You can use this system in any area of life where patience may not always come naturally.
Whether its buying property or saving toward retirement—an endowed fund allows users like yourself greater peace knowing they’re taking steps towards success by building their own security foundation before anything else happens. Parents often also invest in long-term endowment plans for their children’s university education as well. Each student requires at least $30,000 and above for their degree.
An endowment plan can be a good option if you want life insurance coverage. The policy will provide coverage for the term of the program, and when the term ends, you will receive a payout that you can use to cater for your life insurance premiums.
Disability coverage is important, especially if you have a chronic condition. A good way to get it would be through an endowment plan that pays out after a specific period.
An endowment plan can help when dealing with expensive disabilities such as arthritis or cancer treatment costs which may arise from time-to edge due natural causes.
There are various best short term endowment plans in Singapore. They include;
The GREAT SP Series is a short-term endowment plan with a guaranteed interest rate of up to 2.30% per annum. It is a limited short-term endowment plan and the package is set to last for two years.
You’ll need a minimum premium of $10,000.
The DBS SavvyEndowment 7 is best for readers with a short-term saving goal. DBS SavvyEndowment 7 is a 2-year plan. Interested applicants can start with simply $5,000. This policy also includes the coverage for death benefits at 101% of a premium.
Returns are estimated to be at 3.54% over 2 years upon maturity. It is a good short-term commitment plan.
The Manulife Goal is a short-term endowment plan with a guaranteed interest rate of up to 1.39% per annum. The overall policy term is three years, and the minimum sum assured is $100,000. Minium payment for this endowment plan is $10,000.
(LIC)The LIC Secure Growth is a short-term endowment plan which has a guaranteed interest rate of up to 0.50% per annum. The policy term is three years, and the premium ranges from $20,000 to $150,000.
(LIC)The LIC Wealth Plus is a short-term endowment plan with a guaranteed interest rate of up to 0.40% per annum. The policy period is six years, and its minimum sum assured is $100,000.
(Etiqa)The Etiqa Tiq is one of the short-term endowment plans with a guaranteed interest rate of up to 0.35% per annum. Its policy term is three years, and the minimum sum assured is $50,000.
(NTUC Income)The NTUC Income Gro Capital Ease is another option of a short-term endowment plan which has a guaranteed interest rate of up to 0.30% per annum. The policy term is five years, and the minimum sum assured is $20,000.
Short-term endowment plans can get rather confusing. Before you commit your savings, it would be best to consider some factors before choosing an endowment plan Singapore. Some of these factors include;
The term of the plan is an essential factor to consider. It would be best if you choose a plan with a term that suits your needs. You should choose a short-term endowment plan when you have a short-term goal. Are you planning to reap the returns in 2 years? 5 years?
It would help if you choose a plan with a high-interest rate to earn more money on your investment. Therefore, you should consider the interest rate before choosing an endowment plan.
The minimum sum assured is the minimum amount of money you can invest in the plan. You can settle for a plan with a low minimum sum assured so that you can afford it.
It refers to the length of time for which the policy will be in force. You should choose short-term endowment plan in a case where you want coverage for a short time. You should choose a long-term endowment plan when looking for coverage over an extended period.
The premiums are the amount you will pay for the policy. It would help if you choose a plan with affordable bonuses to afford it.
There are many benefits of short-term endowment plans in Singapore. They include;-
The main risk of a short-term endowment plan is that the policyholder may not receive the full value of their investment if they surrender the policy before it matures.
In addition, the policyholder may have to pay higher premiums if they have any health issues when they renew the policy.
Short-term endowment plans are suitable for individuals who are looking for a short-term savings solution. Don’t put all of your eggs in one basket.
If you’re planning to spread out your assets, short-term endowment plans are one of the better options. Your money will not grow more sitting in the bank. The policy can act as a safety net in case of unforeseen circumstances, such as losing your job or being diagnosed with an illness.
In Singapore, there are a variety of short-term endowment plans to choose from. Each plan has its own unique set of features and benefits, so it’s important to do your research before deciding on which policy is right for you.
By understanding what an endowment plan is and the different types of short-term plans available, you can make an informed decision about how to protect yourself and your loved ones financially.
Katong Credit can help you ensure that all of your financial needs are met. Find the best loan products or receive free advice from us. Learn more about Katong Credit here.