Insurance Singapore

Educational articles on Singapore Insurance


Savings Insurance Plan


Saving insurance (or endowment insurance as it is often known) can be more easily understood if you think of it as a scheme for savings that also provides life insurance cover.  Life insurance cover is for a specified period that normally ranges from five years to 30 years in Singapore.  If during this specified period, you should happen to die then your beneficiary or your family will get a lump sum payment from the insurer.  If you happen to outlive the expiry of the policy you will receive a lump sum payment called the maturity value.  Some of the premiums that you pay will be invested for you and the returns from the investment will be credited to you normally on an annual basis.  The maturity value therefore will comprise of the sum insured plus the returns that are due to you.

Now, because of the cash value of the policy, endowment policies tend to be more expensive in comparison with normal term insurance.  You may not get an increased coverage in terms or life insurance but you will see some returns on the premiums that you pay whether you live or you die during the term of the policy.  On the other hand, with a normal term insurance, you will receive nothing if you outlive the policy and your family will see a payment only if you die while the cover is still valid.  You have the options of an endowment with profits plan which lets you share the profits of the insurer and your share of profit is normally credited to you as a bonus annually.  The bonus cannot be taken away from you but the rate of bonus can vary from year to year.  You can also opt for an endowment without profits plan which does not give you any profits and restricts you to the basic sum insured.  In Singapore, the common endowment policies come with profits.

An endowment insurance policy in Singapore essentially provides you with a fixed maturity date, steady returns over the period of the policy and steady growth in the value of your policy.  The rates of return that insurers offer are generally superior to the rates offered by banks on long-term deposits.

Here are some other points that you should keep in mind:

  • The policy will have a fixed maturity date and cover will automatically lapse on this day.  The maturity value will then be paid to you if you are still alive.
  • The cash value of the policy builds up quickly and will acquire a substantial surrender value within a few years.  Once the surrender value builds up, you can take a loan from the insurer with the policy as collateral if you are in need of money.  You should note that you would have to pay interest on the loan.
  • If your premium is not paid within the grace period (normally 30 days from the date) and there is insufficient cash value in the policy, your policy will lapse.  If your policy has built a sufficient cash value (normally within three years or so), you can prevent the policy from lapsing by asking for non-forfeiture or a reduced paid-up policy.
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