Am I Too Young to Purchase an Endowment Plan?

By Contributing Author, 19 April 2016 1071

You’re never too young to purchase an endowment plan.

An endowment plan is a type of insurance that helps you grow your money while providing basic insurance coverage. When the policy matures at the end of a specific term, the policyholder gets back the principal amount saved from the regular premium contributions, plus bonuses earned from the investment.

The regular contributions made by the policyholder are invested and the returns generated go towards building up your savings to help you meet your financial planning goals, such as making a downpayment for a home or funding your child’s education. While you save, you are also insured against death and disability.

How do you know if you should take up an endowment plan?

With numerous types of endowment plans available in the market, it can be difficult to know where to start. It all boils down to your objectives.

What timeframe are you looking at for it to mature? Do you need the lump sum in 10 years? Or maybe 30 years when you’ve retired and would like to travel the world?

If you are looking for a plan that offers flexibility on the maturity terms while supplementing your savings, you can consider RevoSave, available for purchase online. It offers you the option to take out cash benefits even as you save. Compared to investment-linked plans where the bonuses (profits) are not guaranteed, endowment plans offer considerable security for you to meet your financial planning goals. These plans are great because the monthly premiums serve to enforce a disciplined approach to your savings.

If you’re unsure about which endowment plan best suits your needs, seek professional help from a trusted financial planner. He or she will be able to guide you through a proper financial needs analysis to identify your financial goals and provide solutions that are within your budget.

So, when should you buy it?

The earlier you start, the better! The longer the policy is in effect, the more time it has to grow in value. Therefore, you are never too young to start saving. If affordability is a concern, you can start by setting aside a small amount every month that goes towards your savings plan. You can gradually increase this amount in the future as your earning power increases.

If you have a specific financial goal that you want to achieve, consider taking up a plan that matures just before you will need that sum of money. For example, if you’ve just had a baby, you can anticipate that you’ll be needing a substantial amount to send him or her off to university in 20 to 25 years’ time.

Even if you do not have a medium- to long-term financial goal in mind, having an endowment plan builds your savings for a rainy day. Paying for your monthly premiums is akin to putting money in a piggy bank except that this piggy bank also offers bonuses and insurance protection – a double win! 

To find out more about the various life insurance and savings plans that may suit your needs, consult an Income adviser or our digital adviser, askSage. If you are keen on finding out more on investment-linked plans, speak to an Income adviser today.

This advertisement has not been reviewed by the Monetary Authority of Singapore.