What Is Endowment Policy In Life Insurance

What Is Endowment Policy In Life Insurance – Insurance Pros and Cons of Buying a Gift Package in Singapore Don’t buy a gift package without understanding your needs and how the gift plan can help meet those needs.

Usually sold through insurance agents and private banks, Singaporeans have varying degrees of knowledge about gift plans, sometimes even after purchase.

What Is Endowment Policy In Life Insurance

What Is Endowment Policy In Life Insurance

Even among financial professionals, there can be differing views on what a gift plan is and is not. Some advisors may view gift projects as “forced savings.” Some think of it as an investment vehicle, while others think of it as an insurance policy.

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Note that there are many different gifting schemes in Singapore, each of which offers its own advantages (and disadvantages, of course), and our article may be accepted as a general category.

Also, any references we make to actual products in this article are for educational purposes only and do not imply our endorsement or approval of those products.

Compared to investing in the stock market, endowment plans generally have a guaranteed return. You will get your guarantee back if you pay all premiums paid and keep this policy until the maturity date.

The picture above is self-explanatory. Policyholders will pay an annual premium of $2,483.60 over 12 years, for a total of $29,803.20. The policy matures after 21 years. There is a $35,000 money back guarantee if the policy is followed through.

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On the other hand, the minimum policyholders will receive is $35,000 regardless of market performance.

If you invest on your own, there is no guarantee that you will earn extra income or keep your principal. In severe cases, you can lose your entire principal.

Unguaranteed returns can be considered positive or negative. For now, look at it as an expert.

What Is Endowment Policy In Life Insurance

Gift plans can be made at a higher rate compared to other instruments like savings accounts and fixed deposits.

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For example, in the case of AIA Smart Growth (II), if the participating fund earns a long-term annual return of 4.75%, policyholders will receive an additional $19,028 in return.

In turn, make gift plans more attractive than fixed deposits. This is especially so if the guaranteed returns of the plan provide the same returns as fixed deposits. In some ways, this is similar to a fixed deposit and non-guaranteed “bonus” withdrawal based on the performance of the insurer’s participating funds.

Most gift plans offer insurance as part of the plan’s overall benefits.

For example, Great Eastern offers a Flexi Endowment plan that covers death, terminal illness and permanent disability during the policy period. It offers certain types of coverage in addition to the guaranteed and non-guaranteed benefits specified in the policy.

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This is different from conventional investments where a person is investing in the future of someone important to them and does not take any insurance.

Hence, gift plans are popular among parents who want to save and invest for their children’s education as there is a guaranteed fixed amount to be given to their children no matter what happens in the future.

Also Read: Do you want to give your child the best possible future? Here’s a stress-free way to start investing today

What Is Endowment Policy In Life Insurance

One misconception to avoid when buying a gift package is to assume that the premium paid for the policy is automatically guaranteed and you’ll get it all back, plus some extras when the policy matures.

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This is not always true. You need to understand this yourself to avoid big disappointments in the future.

From the benefit statement above, you can see that the premium paid to date is $200 and the 378 return guarantee is only $189,000. This may not sound good to anyone who bought a gift set hoping for a return guarantee. From this.

At the same time, the benefit of death in the example above is great. A death benefit of $189,000 is payable during the policy period. In essence, having a significant amount of coverage over the policy term balances out the minimum guaranteed payout.

However, at the end of the day, you need to ask yourself what your reasons are for buying a gift set in the first place.

Monetary Authority Of Singapore

Usually, most gift plans last 10 to 20 years, so you should continue to plan. This means 1) pay your premiums promptly, and 2) don’t abandon your project.

Penalties can be very expensive if you end your gift plan early. If you leave your policy for the first few years, chances are you won’t get anything back from your policy.

In our opinion, if you’re not sure if you can afford the entire gift plan, it’s better to use a savings account and invest your own money.

What Is Endowment Policy In Life Insurance

Finally, you should remember that the return on your insurer’s investment may not equal the actual return you will receive from your gift plan.

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For example, in the case of AIA Smart Growth (II), if the participating fund earns an investment return of 4.75% per annum, the actual return to the policyholder is 3.85%.

Gift plans offered by various insurance companies will have their own benefits. This example is from NTUC Income.

By now, I hope you have understood enough of the gift plan to know that this does not mean that the AIA plan is better than the NTUC income plan, as there is little difference between the profit earned and the actual profit.

If you’re looking to buy a gift package for investment purposes, you need to know the difference between the insurance company’s long-term average return and the actual return you’ll receive.

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Otherwise, you may unknowingly buy an insurance-based product instead of an investment-based product.

Here are the pros and cons of gift plans that you should fully understand before considering your policy.

Questions about the gift plan? You can join the Insurance Discussion SG Facebook Group Open to ask your Insurance related questions.

What Is Endowment Policy In Life Insurance

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Life insurance is only for the survivors and not for the deceased. It is everyone’s moral duty to protect their family members from unexpected situations and death. Therefore, life insurance plays an important role in the world.

“Contracts in which the insurer pays fixed premiums and pays a certain amount of premium to the policyholder after the policy expires or dies, whichever comes first” Types of Life Insurance Policies

Types of Life Insurance Policies All life policies are essential policies. Under this principle, a person is insured for life. The insurance company cannot pay the insured while he is still alive. The premium for such a policy is very low. According to this principle, only after the death of the insured, his legal heirs or heirs are paid. This policy is more beneficial to the family of the deceased as it provides financial assistance to the family after the death of the insured.

What Is Endowment Policy In Life Insurance

Types of Life Insurance Policy Annuity insurance policy is an important principle. In such policies, insurance is taken for a certain period of time. According to this principle, the insurance premium is paid to the deceased’s dependents along with the bonus, or after a certain period of time, the insurer receives a certain amount of money along with the bonus. Such insurance plans are popular today as they protect the families of the deceased or provide old age pensions to the insured.

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Types of Life Insurance Policies A term insurance policy is an important principle. This.

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