Endowment plan - keep or cancel ?

[Meemoosaa]

Hi all finance people here... Need some advise on my current endowment plan as I realised endowment plans seems to be frowned upon mostly.

Bought a Manuel Life Ready Life Builder (Regular Savings plan) back in 2017 from DBS. I was very much a noob in any form of investment back then but wanted to jumpstart savings for retirement, somehow got persuaded to buy into an endowment plan.

Fast forward today, I'm now more savvy in various investment instruments. If anything, the returns have been great, I feel at ease and I totally understand the ins and outs of how it all works. Even volunteering CPF cash top up makes me feel good.

On the other hand, I'm frustrated with the endowment plan bcos half the time, I don't quite understand all the jargon, and simi bonuses going into the pile also unclear and all, and with money locked up, and all the promised "projected" returns which could all be moot in 20 years time, and if times are bad I think I will be lucky to even see the original sum.

Regarding my plan, it is as below. I think projected at 4.75% p.a but don't know what based on past returns, usually around 3%++. If 3% ++, I'll rather have it go into my SSB and ETFs right ?

I'm not sure if I should stop now.. and if I do what am I even allowed to withdraw. Any thoughts will be much appreciated !

10 years plan - Savings will stop after 10 years, no need to input premium anymore (I'm in my 7th year, so 3 more years to go)

15 years - Full sum can be withdraw without any withhold . (Original 10 yers + extra $$$$ which I assume is "projected" interest. Lol)

20 years - Some projected withdrawal...

25 years (will be in my early 60s) - Savings is projected to double based on what I first input in the first 10 years... ( double ??) Not sure what I was on when I signed on the form. Anyway, if it's ever that optimistic it would be just in time for retirement. lol

Now that I'm typing it all out, might be a good idea to stop investing in now and just let whatever that's left inside to roll until the 15th year ? Have i just answered my own question ? lol... Thoughts welcomed. Thanks.

 

[reddevil0728]

Hi all finance people here... Need some advise on my current endowment plan as I realised endowment plans seems to be frowned upon mostly.

Bought a Manuel Life Ready Life Builder (Regular Savings plan) back in 2017 from DBS. I was very much a noob in any form of investment back then but wanted to jumpstart savings for retirement, somehow got persuaded to buy into an endowment plan.

Fast forward today, I'm now more savvy in various investment instruments. If anything, the returns have been great, I feel at ease and I totally understand the ins and outs of how it all works. Even volunteering CPF cash top up makes me feel good.

On the other hand, I'm frustrated with the endowment plan bcos half the time, I don't quite understand all the jargon, and simi bonuses going into the pile also unclear and all, and with money locked up, and all the promised "projected" returns which could all be moot in 20 years time, and if times are bad I think I will be lucky to even see the original sum.

Regarding my plan, it is as below. I think projected at 4.75% p.a but don't know what based on past returns, usually around 3%++. If 3% ++, I'll rather have it go into my SSB and ETFs right ?

I'm not sure if I should stop now.. and if I do what am I even allowed to withdraw. Any thoughts will be much appreciated !

10 years plan - Savings will stop after 10 years, no need to input premium anymore (I'm in my 7th year, so 3 more years to go)

15 years - Full sum can be withdraw without any withhold . (Original 10 yers + extra $$$$ which I assume is "projected" interest. Lol)

20 years - Some projected withdrawal...

25 years (will be in my early 60s) - Savings is projected to double based on what I first input in the first 10 years... ( double ??) Not sure what I was on when I signed on the form. Anyway, if it's ever that optimistic it would be just in time for retirement. lol

Now that I'm typing it all out, might be a good idea to stop investing in now and just let whatever that's left inside to roll until the 15th year ? Have i just answered my own question ? lol... Thoughts welcomed. Thanks.

Sounds like better to just continue since only 3 more years to go

 

[gold_eagle36]

Are you sure it's an endowment and not ILP

 

[lzydata]

Hi all finance people here... Need some advise on my current endowment plan as I realised endowment plans seems to be frowned upon mostly.

Bought a Manuel Life Ready Life Builder (Regular Savings plan) back in 2017 from DBS. I was very much a noob in any form of investment back then but wanted to jumpstart savings for retirement, somehow got persuaded to buy into an endowment plan.

Fast forward today, I'm now more savvy in various investment instruments. If anything, the returns have been great, I feel at ease and I totally understand the ins and outs of how it all works. Even volunteering CPF cash top up makes me feel good.

On the other hand, I'm frustrated with the endowment plan bcos half the time, I don't quite understand all the jargon, and simi bonuses going into the pile also unclear and all, and with money locked up, and all the promised "projected" returns which could all be moot in 20 years time, and if times are bad I think I will be lucky to even see the original sum.

Regarding my plan, it is as below. I think projected at 4.75% p.a but don't know what based on past returns, usually around 3%++. If 3% ++, I'll rather have it go into my SSB and ETFs right ?

I'm not sure if I should stop now.. and if I do what am I even allowed to withdraw. Any thoughts will be much appreciated !

10 years plan - Savings will stop after 10 years, no need to input premium anymore (I'm in my 7th year, so 3 more years to go)

15 years - Full sum can be withdraw without any withhold . (Original 10 yers + extra $$$$ which I assume is "projected" interest. Lol)

20 years - Some projected withdrawal...

25 years (will be in my early 60s) - Savings is projected to double based on what I first input in the first 10 years... ( double ??) Not sure what I was on when I signed on the form. Anyway, if it's ever that optimistic it would be just in time for retirement. lol

Now that I'm typing it all out, might be a good idea to stop investing in now and just let whatever that's left inside to roll until the 15th year ? Have i just answered my own question ? lol... Thoughts welcomed. Thanks.

Just a point on the projected 4.75% pa. This was the upper illustration rate of investment returns standardized across life insurers in Singapore (the lower is 3.25%). Now the two rates are 4.25% and 3% respectively.

https://www.straitstimes.com/busine...rticipating-policy-illustrations-no-impact-on

So in other words it is not necessarily what this particular insurer or policy will get. You can also look at their reports on the asset allocation of the participating fund. It should be mainly safe investments like bonds and cash equivalents, which also means the returns cannot be that high.

I also think you can keep it since you have just 3 years of premiums left to pay, if you do not need the money urgently.

 

[BBCWatcher]

I also think you can keep it since you have just 3 years of premiums left to pay, if you do not need the money urgently.

I wouldn't assume that. There's something called the "fallacy of sunk costs." It can apply to some insurance policies/plans.

It should be fairly simple to compare the "Next Best Alternative" (NBA) for these 3 years of premiums to paying the 3 years of premiums.

 

[royalmix]

10 years plan - Savings will stop after 10 years, no need to input premium anymore (I'm in my 7th year, so 3 more years to go)

Based on what you wrote, it is not because you cannot afford to pay the remaining 3 years of premium?

Considerations:
1. How much is your mthly/annual premium?
2. What is the implication if you stop paying premiums?
3. How much is the surrender value now, ie how much will you lose (capital)? Can you easily recover this loss with your investments (include loss of returns for 7 years too)? How much can you make with the 3 years of premiums saved?
4. If you dun need the money and still can afford to pay, can your other investment returns compensate for this "lower returns" now and may be better in future?
5. Dun forget this covers insurance, do you need it?

I have no experience with the Manulife endowment plan. But I have a "bad" endowment with Manulife, fully paid, waiting for maturity, I just hope my other returns on investments help to compensate for this "mistake", hopefully not when it matures!

But my life insurance policies are giving me returns 4-5%pa returns after more than 20 years - you will only see the returns after many years, lucky with the right policies and right insurer!

Good luck to you!

(ps. did you join their "premium cashback" program? I get about 100+ per year but the program ended this Oct, I am waiting for my final $50 "cashback"! )

I invested via RSP because of higher savings interest, stopped the account but decided to hold 1k of investment to test the market over the past few years. Paper loss less than 300, recently thinking should I cut loss? I received about 3%+pa in dividends every mth, so decided to keep and wait for the market to recover

 

[ctan84]

Hi all finance people here... Need some advise on my current endowment plan as I realised endowment plans seems to be frowned upon mostly.

Bought a Manuel Life Ready Life Builder (Regular Savings plan) back in 2017 from DBS. I was very much a noob in any form of investment back then but wanted to jumpstart savings for retirement, somehow got persuaded to buy into an endowment plan.

Fast forward today, I'm now more savvy in various investment instruments. If anything, the returns have been great, I feel at ease and I totally understand the ins and outs of how it all works. Even volunteering CPF cash top up makes me feel good.

On the other hand, I'm frustrated with the endowment plan bcos half the time, I don't quite understand all the jargon, and simi bonuses going into the pile also unclear and all, and with money locked up, and all the promised "projected" returns which could all be moot in 20 years time, and if times are bad I think I will be lucky to even see the original sum.

Regarding my plan, it is as below. I think projected at 4.75% p.a but don't know what based on past returns, usually around 3%++. If 3% ++, I'll rather have it go into my SSB and ETFs right ?

I'm not sure if I should stop now.. and if I do what am I even allowed to withdraw. Any thoughts will be much appreciated !

10 years plan - Savings will stop after 10 years, no need to input premium anymore (I'm in my 7th year, so 3 more years to go)

15 years - Full sum can be withdraw without any withhold . (Original 10 yers + extra $$$$ which I assume is "projected" interest. Lol)

20 years - Some projected withdrawal...

25 years (will be in my early 60s) - Savings is projected to double based on what I first input in the first 10 years... ( double ??) Not sure what I was on when I signed on the form. Anyway, if it's ever that optimistic it would be just in time for retirement. lol

Now that I'm typing it all out, might be a good idea to stop investing in now and just let whatever that's left inside to roll until the 15th year ? Have i just answered my own question ? lol... Thoughts welcomed. Thanks.

You can ask for the current surrender value and check against the Benefit Illustration Table to see if they are behind, on time or ahead with the projection. I can tell you won't have 3% or more one. Got 2% you can laugh liao.

 

[DevilPlate]

If it is relatively small amount, just keep it lor as part of diversified portfolio.

I previously had endowment plan already matured.....the payout amount 25years later became very small whahaha

 

[Nofear40]

There is guaranteed portion right?

 

[sohguanh]

2017 buy very young plan so if you surrender I doubt get back premiums paid. If you fist very tight then surrender lor. My endowment is 20 30 years kind and already profitable.

 

[ctan84]

2017 buy very young plan so if you surrender I doubt get back premiums paid. If you fist very tight then surrender lor. My endowment is 20 30 years kind and already profitable.

His seems to be the pay 10 yrs then wait 10 yrs type of plan, so total 20 yrs.

 

[Meemoosaa]

Are you sure it's an endowment and not ILP

To be honest, unsure ... endowment or ILP. I think it's endowment.

Got persuaded to buy it when i was still a noob 7 years ago. Since supported by DBS, just went for it.

"Endowment plans combine insurance coverage with long-term savings, offering a lump sum payout at the end of the policy term or upon the insured's death"

https://www.dbs.com.sg/personal/articles/nav/protection/endowment-plans-types-features#:~:text=Endowment plans combine insurance coverage,optional riders to enhanced coverage.

 

[Meemoosaa]

Just a point on the projected 4.75% pa. This was the upper illustration rate of investment returns standardized across life insurers in Singapore (the lower is 3.25%). Now the two rates are 4.25% and 3% respectively.

https://www.straitstimes.com/busine...rticipating-policy-illustrations-no-impact-on

So in other words it is not necessarily what this particular insurer or policy will get. You can also look at their reports on the asset allocation of the participating fund. It should be mainly safe investments like bonds and cash equivalents, which also means the returns cannot be that high.

I also think you can keep it since you have just 3 years of premiums left to pay, if you do not need the money urgently.

Thanks for sharing the link !! Mine was bought in 2017, so does it abides to 3% now instead of 3.25% ?

As for asset allocation, manage to dig out the participating fund statement and you are right:

54% corporate bonds
30% equities
The rest are loans and government, public securites.

I do not need the money urgent but simply in a dilemma if I should continue to pay the premiums for the remaining 3 years where those money could be put into other investment. Even SSB seems to be a better option when it has been 3% high all these months.

 

[Meemoosaa]

I wouldn't assume that. There's something called the "fallacy of sunk costs." It can apply to some insurance policies/plans.

It should be fairly simple to compare the "Next Best Alternative" (NBA) for these 3 years of premiums to paying the 3 years of premiums.

Thanks for the reminder on fallacy of sunk costs. Will keep that in mind as I make some comparisons.

 

[Meemoosaa]

Based on what you wrote, it is not because you cannot afford to pay the remaining 3 years of premium?

No, I believe I can still continue with the 3 years of premium without much issue, but just thinking if the remaining 3 years of premium is better invested elsewhere than letting it get stuck in this plan. I wanna put more of it into ETFs.

Considerations:
1. How much is your mthly/annual premium?
2. What is the implication if you stop paying premiums?
3. How much is the surrender value now, ie how much will you lose (capital)? Can you easily recover this loss with your investments (include loss of returns for 7 years too)? How much can you make with the 3 years of premiums saved?
4. If you dun need the money and still can afford to pay, can your other investment returns compensate for this "lower returns" now and may be better in future?
5. Dun forget this covers insurance, do you need it?

Thanks for these questions ! Will come in very handy when I make my bank appointment next especially the surrender value one.

As for insurance portion, it's very lame and not even in my radar. 105% death benefit ? To be honest, I think the insurance portion in attached to it for formality or regulation so that they can sell the main investment product. No I do not need the insurance bit at all.

I have no experience with the Manulife endowment plan. But I have a "bad" endowment with Manulife, fully paid, waiting for maturity, I just hope my other returns on investments help to compensate for this "mistake", hopefully not when it matures!

But my life insurance policies are giving me returns 4-5%pa returns after more than 20 years - you will only see the returns after many years, lucky with the right policies and right insurer!

Good luck to you!

(ps. did you join their "premium cashback" program? I get about 100+ per year but the program ended this Oct, I am waiting for my final $50 "cashback"! )

4-5% sounds like a good return !

I got attracted to the 18% promotion for the first year. i.e. Fork out only $8.20 for $10

And it worked - on me. Lol

I invested via RSP because of higher savings interest, stopped the account but decided to hold 1k of investment to test the market over the past few years. Paper loss less than 300, recently thinking should I cut loss? I received about 3%+pa in dividends every mth, so decided to keep and wait for the market to recover

Mine's also considered a RSP but I don't think I see any incoming dividend. I receive bonus statement every year but I don't even know where it goes to, probably back into the fund pool ? That's why I'm quite frustrated and don't think I'm suitable for these sort of plans. Too many unclear statements and jargons for my liking, hopefully I can get a bit smarter on here with the help of some of you.

 

[Meemoosaa]

You can ask for the current surrender value and check against the Benefit Illustration Table to see if they are behind, on time or ahead with the projection. I can tell you won't have 3% or more one. Got 2% you can laugh liao.

Thanks ! Managed to dig up the paper work given to me back in 2017 - without displaying the exact numbers.. this is it...

Under the "Surrender Value table" at my age.
Guaranteed surrender value = roughly about 50% of total premium paid to date. (A)

Under "Projected 3.25% investment return" at my age
Non-guarantee = roughly 2.6% of total premium paid to date (B)
Total = A + B

Under "Projected 4.75% investment return" at my age
Non-guarantee = roughly 4.6% of total premium paid to date (C)
Total = A + C

Now I guessed my question is..... how to check whether they are behind, on time or ahead with the projection ?

 

[Meemoosaa]

If it is relatively small amount, just keep it lor as part of diversified portfolio.

I previously had endowment plan already matured.....the payout amount 25years later became very small whahaha

That's what I have been hearing through the grapevine too, that endowment returns always turns out way more disappointing that all the "projections". How many % was the payout in the end for you ?

While I don't have a problem paying the premium for the remaining 3 years, I do feel it's pretty substantial for me. Small or big amount is relative to everyone I guessed.

 

[Meemoosaa]

There is guaranteed portion right?

Seems like it.. there is a "Guaranteed" portion under "Surrender Value" table, it's about 50% of total premiums paid to date. Does that mean I can withdraw 50% of whatever that's in there if I surrender now ?

 

[Meemoosaa]

2017 buy very young plan so if you surrender I doubt get back premiums paid. If you fist very tight then surrender lor. My endowment is 20 30 years kind and already profitable.

Bought when I was in my late 30s. The guaranteed portion under the surrender value table is about 50% of premium paid. Now wondering if that means can retrieve 50% of whatever that is inside ..

Fist not tight, just brain itchy and prefer to invest in other areas now that I'm much less of a noob.

His seems to be the pay 10 yrs then wait 10 yrs type of plan, so total 20 yrs.

That's correct. Am in my 7th year, 3 more years left so unsure to continue or surrender now. If my assumption is that can retrieve 50% at this stage, I might do it.

 

[ctan84]

Thanks ! Managed to dig up the paper work given to me back in 2017 - without displaying the exact numbers.. this is it...

Under the "Surrender Value table" at my age.
Guaranteed surrender value = roughly about 50% of total premium paid to date. (A)

Under "Projected 3.25% investment return" at my age
Non-guarantee = roughly 2.6% of total premium paid to date (B)
Total = A + B

Under "Projected 4.75% investment return" at my age
Non-guarantee = roughly 4.6% of total premium paid to date (C)
Total = A + C

Now I guessed my question is..... how to check whether they are behind, on time or ahead with the projection ?

You look at the current year on the benefit illustration table for SURRENDER VALUE (not death benefits), see what is the guaranteed value + the non-guaranteed value under the 3.25% projection. Then u log on the online portal of your insurance company, the surrender value of the plan is usually indicated there. Don't be surprised if the difference is big, with your current surrender value way behind the projected value.