Comprehensive Guide
A structured approach to building wealth with guaranteed elements and insurance protection.
A savings plan (also called an endowment plan) is an insurance product that combines disciplined savings with life protection.
You commit to premium payments over a fixed period. At maturity, you receive a guaranteed sum plus potential bonuses.
Principal protected at maturity
Clear start and end date
Two components of returns
Death & TI coverage included
| Feature | Participating | Non-Participating |
|---|---|---|
| Bonus Structure | Guaranteed + Non-guaranteed bonuses | Guaranteed benefits only |
| Investment Risk | Shared with insurer (bonuses may vary) | Borne entirely by insurer |
| Potential Returns | Higher (if bonuses perform well) | Lower but more predictable |
| Cash Value | Builds over time (guaranteed + vested bonuses) | May or may not have cash value |
| Best For | Those who want potential upside | Those who want complete certainty |
One lump-sum payment at the start of the policy.
Payments at regular intervals (monthly, quarterly, annually).
You pay premiums (single or over 3-25 years). Money enters the policy.
Insurer invests your premiums. Bonuses may be declared annually and added to your policy.
Receive guaranteed maturity benefit + accumulated bonuses. Policy ends.
Premium
Payment
Accumulation
Period
Maturity
Payout
The guaranteed portion in many endowment plans can be lower than what you paid. The attractive returns shown in illustrations often rely heavily on non-guaranteed bonuses. Always check both scenarios.
Declared annually and added to your policy. Once declared, it becomes guaranteed and cannot be taken away.
Only paid at maturity, death, or surrender. Highly dependent on fund performance at that time. Can be zero.
| Feature | Savings Plan | Fixed Deposit | Unit Trust/ETF |
|---|---|---|---|
| Capital Guarantee | At maturity | Yes (SDIC $100k) | No |
| Return Potential | Moderate | Low | Higher (variable) |
| Liquidity | Low | Medium | High |
| Insurance Coverage | Yes | No | No |
| Best For | Long-term goals + protection | Short-term parking | Growth-seeking investors |
| Feature | Endowment Plan | ILP |
|---|---|---|
| Guaranteed Returns | Yes (a portion) | No |
| Investment Risk | Shared with insurer | Fully borne by you |
| Fund Selection | Managed by insurer | You choose funds |
| Transparency | Less transparent | More transparent |
| Best For | Conservative savers | Those comfortable with market risk |
Risk Level
Return Potential
Save systematically for your child's university fees. Maturity aligns with when funds are needed (typically 15-18 years).
Create a guaranteed income stream for retirement. Some plans offer lifetime payouts after an accumulation period.
Disciplined approach to building a nest egg for major milestones like a home, wedding, or other life goals.
Belief
"Endowment plans guarantee high returns."
Reality
Only a portion is guaranteed. Illustrated returns rely on non-guaranteed bonuses.
Belief
"I can withdraw anytime like a savings account."
Reality
Early withdrawal incurs surrender penalties. You may get back less than you paid.
Belief
"The projected returns will definitely be achieved."
Reality
Illustrations show two scenarios (typically 3.25% and 4.75%). Actual results may differ.
It depends on your goals. Endowment plans are suitable if you want disciplined saving with some insurance coverage and partial guarantees. For higher long-term growth, diversified investments may be more appropriate. Always compare the illustrated IRR against alternatives like SSBs, T-bills, and fixed deposits.
You will receive the surrender value, which is typically lower than the premiums paid, especially in the early years. Surrender charges apply, and you lose the terminal bonus. It's important to only commit to premiums you can maintain for the full term.
Reversionary bonuses are declared annually based on the participating fund's performance. Once declared, they become guaranteed. Terminal bonuses are only paid at maturity, death, or surrender and can vary significantly based on market conditions at that time.
Many endowment plans are CPF and SRS eligible. Using SRS funds can provide tax benefits. Check with the insurer or your advisor on which plans qualify and the specific terms that apply.
Compare: (1) Guaranteed vs non-guaranteed portion, (2) Premium term and maturity timeline, (3) Insurer's bonus track record, (4) Surrender value schedule, (5) Fees and charges, (6) Death benefit coverage. Always request benefit illustrations from multiple insurers.
Endowment plans typically offer higher potential returns than bank deposits but with lower liquidity and longer commitment. Bank deposits are insured up to $100k (SDIC) and offer immediate access. The right choice depends on your timeline and liquidity needs.
Every financial decision should be made with clarity. Our advisors are here to help you understand your options - without pressure or promises.
Schedule a ConsultationNo obligations. Educational discussion only.