How Can Endowment Insurance Help In The Growth Of Your Savings?
Updated On Feb 16, 2022
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An endowment policy is a life insurance policy with a savings component. Endowment policies are frequently set to expire after a specific period of time. As a result, if you're aiming to fulfil financial goals that won't be met once your policy matures, such as paying for your child's tertiary school tuition or investing for retirement, it's very beneficial. 'Wealth Accumulation Plans' is another name for them.
How Can Endowment Policies Aid in Savings Growth?
Here are some things to think about if you want to expand your funds with an Endowment plan:
1. Be Prepared For A Downturn
Many of us are aware that Singapore is currently coping with both the COVID-19 outbreak and a looming economic downturn. Closures have occurred in certain areas, such as travel, tourism, and retail outlets, hurting both business owners and employees. While some may have already been laid off, those of us who have been fortunate enough to keep our jobs should rethink our spending priorities and start saving more to safeguard our financial future.
2. A Technique For Saving In A Low-Interest Rate Environment
One of the most essential principles of financial planning is the importance of saving. Unexpected events can be reduced by having additional finances on hand, such as a long-term illness, a retrenchment, or a desire to take a sabbatical to pursue one's dreams. While banks pay minimal interest on cash deposits, there are a variety of different savings options that can provide better returns, especially in a low-interest rate climate like the one we're in now.
3. Increase Your Financial Assets' Size And Stability
Not only must you preserve money, but you must also safeguard yourself. An endowment plan not only offers you with potential revenues, but it also protects you financially. Some policies provide a death benefit of 101 percent of the single premium in addition to a 100 percent capital return at policy maturity. Furthermore, enrolling is straightforward because there are no medical exams required prior to purchase - entrance is guaranteed. Now you can sit back and watch your savings grow!
4. Maturity Period Is Predetermined
The term "maturity period" simply refers to the amount of time it takes for your money to appreciate in value. You will receive a payout of the premiums you paid, plus any bonuses, when the plan matures. The maturity lengths of endowment plans range from three to thirty years. If you're saving for a specific goal, choose a maturity term that allows you to get your money when you need it. If you're newly married and want to invest in an endowment plan to help pay for your future child's education, you can choose a maturity period of 15-20 years. You might choose a maturity time of 30 years for longer-term goals like retirement.
Endowment insurance policies guarantee that you or your beneficiaries will be paid regardless of whether you live to the end of the policy's term or die before it expires. On the "maturity date," the whole cost of an endowment policy will be refunded to the policyholder or, if the assured dies, to the life insurance policy beneficiary. Bonuses are not guaranteed under this policy. As a result, endowment insurance provides the finest mix of guaranteed and non-guaranteed policy benefits.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.