Guide to endowment insurance savings plans in Singapore

buy endowment plans in singapore

Investing is not just for the rich but it is for everyone to create wealth. Endowment plans are one of the most common types of savings plans that Singaporeans buy for investment or saving purposes.

There are many types of endowment plans in the market that serve various purposes. Therefore, it is important to know what your financial goals are before you buy an endowment plan.

What is an endowment plan?

Before we examine the various types of endowment plans available in the market, it is important to understand what an endowment plan is. The majority of endowment plans in Singapore have the followings in common:

Payment of regular premiums

Endowment plans do not require you to pay one lump sum like investments. Instead, you only need to pay committed premiums at a pre-specified interval (monthly, quarterly or yearly) till your plan reaches maturity. There are also some plans that only require you to pay premiums for a certain number of years before maturity and give out your returns upon maturity.

Fixed maturity period

Unlike stocks, endowment plans do not require buying low and selling high. They typically last up to 25 years to mature and, you should choose the appropriate maturity period depending on your financial goals.

If you are planning for retirement and you are in your twenties or thirties, a longer maturity plan would be more suitable. On the other hand, a shorter maturity plan would be more suitable for older people who are looking to invest in a low-risk investment plan before or during retirement. If you are aiming to achieve a certain goal out of your endowment plan such as purchasing a house or pay for your child’s university fees, you should invest in an endowment plan with a maturity period that can help achieve your goal.

Payouts upon maturity

Upon maturity of your endowment plan, you will receive returns of your investment. However, you will only know how much you will receive upon maturity as the amount varies depending on the performance of the investments your insurance company has been making for you.

When you buy an endowment plan, there will be a guaranteed return amount and a non-guaranteed return amount quoted in your proposal.

The guaranteed amount is the minimum payout you receive and, it may be lower or higher than the sum of all the premiums you have paid over the period of your endowment plan.

Anything over and above the guaranteed amount is non-guaranteed and will vary depending on the performance of the investment by your insurance company.

When you buy an endowment plan, it is important to buy an endowment plan with a guaranteed amount that is more than the sum of the premiums you are going to pay over the years. In case your investment results in a loss, at least you know that your capital is protected and you won’t be making a loss with your endowment plan.

Insurance component

Endowment plans normally come with an insurance component in Singapore. This insurance component is usually life insurance which is offered by the insurance company you bought your endowment policy from.

How the payments towards your endowment premiums work is that a portion of the premiums go towards your insurance and, the rest go towards your investment. If you choose higher insurance coverage, you will receive lower returns when your endowment policy matures.

Although there’s an insurance component in endowment policies, the insurance coverage is too basic. Therefore, it is recommended to take up life insurance if you want to get yourself adequately insured.

Reasons why Singaporeans buy endowment plans

Endowment plans can be a form of low-risk investment if you have a medium to long-term financial goal to achieve.


As endowment plans are normally meant for long-term financial goals, it is a good way to plan for retirement by buying an endowment plan to grow your savings and receive payouts as you are about to step into retirement.

Forced savings

It’s good to save since young and plan for future. If you have an endowment plan since young, you are forced to saved as you are required to make regular payments.

Investment purposes

Although endowment plans are more for saving than investing, it can also be considered as a low-risk investment due to its nature.

Children’s education fund

Being in the most expensive city in the world, tertiary education fees do not come cheap. If your child goes to a university in Singapore, you are expected to fork out at least about $30,000. To plan for such big expenses, Singaporeans buy an endowment plan in advance such that the policy matures and receive payouts just as their child enters university.

Why you should buy an endowment plan

Insurance coverage

In addition to the returns from endowment plans, if you want the insurance that is offered by endowment plans, it is a good reason to sign up for one. Although the insurance offered by such plans is insignificant, if you already have your own insurance policy, the insurance from endowment plans can act as a supplement to that.

Low-risk and predictable investment

If you invest in volatile types of investments like stocks, it is hard to know when you should or should not cash out.

However, with endowment plans, you know exactly when your policy matures and when payouts will be given. If you had planned properly in advance, such as using endowment payouts for your kid’s education, there is no need to worry about your investment being locked up when you need it.

Many endowment plans have the option of liquidating in case you need money urgently. This may result in losses on your investment but the impact is not going to be as dramatic as selling your stocks in a stock market crash.

Last but not least, the risks of investing in endowment plans are very low. As endowment plans always comes with a guaranteed amount, despite the possibility of losing money if your guaranteed returns are lower than the sum of the premiums paid over the years, there is a cap to the loss and, you will still get your guaranteed amount back no matter what.

Things to look out for when buying an endowment plan

The guaranteed amount

When it comes to savings and investments, this is the most important factor to consider. Ideally, it is wise to sign up for an endowment plan that offers guaranteed returns higher than the total premiums paid over the years.

The non-guaranteed amount

It’s only right that you wish the non-guaranteed amount to be as high as possible because this is where you will be making the money most from an endowment plan if the performance of your investment is positive. Therefore, it is important to study the details of your non-guaranteed returns.

When you buy an endowment plan, your financial consultant will come out with a chart showing the maximum non-guaranteed amount you can receive at the end of each year. It is recommended to refrain from signing plans offering $0 non-guaranteed amount for more than a year or two.

Insurance coverage

Although this should not be the main reason for buying an endowment plan, it is still important to read the insurance policy wordings and know what kind of coverage you will be receiving.

The duration, early redemption and surrender penalties

Check the consequences of liquidating or surrendering the endowment plan before the maturity date. There are guaranteed and non-guaranteed amounts you will get if you surrender the policy.

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