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Everyone wants to get maximum financial returns out of their savings but most people go about it the wrong way. Insurance savings plans, for example, offer a relatively higher return for your savings than the interest you get by saving in a bank account. A lot of insurance companies in Singapore offer insurance savings plans but their individual products and features vary.
Since investing in an insurance savings plan is a long-term financial commitment, it is important for you to get value for money. How do you distinguish between the different insurance savings plan? You are probably wondering. This article will help you figure this out while also revealing some of the best insurance savings plan in Singapore that are tailored to meet your needs and preferences.
Best insurance savings plans for wealth accumulation in Singapore
This review offers a look into 6 insurance savings plans, which offer the highest financial returns on your savings. These plans not only offer some of the best rates in Singapore but they are also customized to meet your financial needs. What are the factors we considered when coming up with this list? Well, these are some of the criteria that we considered when drawing up the 6 best insurance savings plans in Singapore.
- Product features that improve financial returns
- The rate of returns against the commitment period
- Competitiveness of premiums against returns after maturity of the savings plan
Best Insurance Savings Plan for Guaranteed Returns: Aviva MySavingPlan/ Aviva MyWealth Plan
Do you want an insurance savings plan that offers you the highest guaranteed returns upon maturity? If this is what you are looking for then Aviva MySavingsPlan/ Aviva MyWealth Plan should be your first choice. With this plan, you can rest assured that you will get one of the highest guaranteed returns in Singapore upon maturity. Both of these plans have a fixed maturity period making them a suitable option if you are looking to achieve a specific financial objective in future.
While both of these plans offer a high guaranteed return, there are also some key differences between the two.
Aviva MySavingPlans is a typical premium term policy that allows you to save for 10 to 25 years with the maturity date being the end of your saving period.
Aviva MyWealth Plan, on the other hand, is a limited premium term insurance policy, which allows you to save for a shorter period of 5 to 10 years. You can, however, choose the maturity date up to the 25th year.
Case study and sample illustration for Aviva MyWealthPlan
Assuming that a policy holder, Jane aged 30, starts with a regular savings amount of $500 monthly and a savings commitment of 10 years. The total premiums paid will add up to $60,000 with the option of having the plan mature at the 20th or 25th year from now. Her projected maturity value for Aviva MyWealthPlan at the end of the 20th year will be a guaranteed surrender value of $74,000 and a projected surrender value of $105,000. For the 25th year maturity, she will be guaranteed $86,000 with a projected surrender value of $132,000.
Case study and sample illustration for Aviva MySavingsPlan (Regular premium term)
If Jane decides to take the Aviva MySavings Plan with a monthly savings amount of $500 and a savings commitment of 25 years, she will pay premiums of $150,000 with her plan maturing on the 25th policy year. Her projected maturity value at the end of the 25th years will have a guaranteed surrender value of $170,600 and a projected surrender value of $251,000.
Best Insurance Savings Plan for Lifetime Savings: Manulife ReadyBuilder
Manulife ReadyBuilder allows you to plan for various savings objectives with a single insurance savings plan. With this plan, you are assured of a high rate of return on your savings and can also make unlimited withdrawals from the cash value of your policy. After you have met all your savings goal, the cash that is left in your ReadyBuilder can be re-assigned to your beneficiaries to help them meet their financial objectives too.
Case study and financial illustration for Manulife ReadyBuilder
Here we see Mary, aged 25, takes the Manulife ReadyBuilder policy with a regular savings amount of $6,000 per annum and a savings commitment of 20 years, her total premiums paid over the course of that period will be $120,000.
Assuming that Mary has not made any cash withdrawals and wishes to surrender the policy for its cash value, she can expect a projected surrender value of $398,041 at the age of 65. At 75, her projected surrender value will be $576,760.
If Mary, at 40 years, decides to reassign the policy to her new-born child (Jason) then she can expect a projected surrender value of $836,149 at age 45 and $1,416,254 at age 60.
Best Insurance Savings Plan for Partial Withdrawal Benefits: Manulife ReadyPayout Plus
The Manulife ReadyPayout Plus is a great choice if you wish to receive cash payouts through increasing partial withdrawals from the cash value of your policy. This policy will allow you to enjoy maximum flexibility with the withdrawals being accessible from the end of the first year. Your future premiums are also waived in the case of permanent disability, which means that your financial objectives would still be met even in unforeseen life circumstances.
Case study and financial illustration for Manulife ReadyPayout Plus
Let’s see Valerie here. She wants to retire at 65 but does not wish to have her life savngs locked up in an insurance savings plan then the Manulife ReadyPayout will be her best choice. This is because of the partial withdrawal option especially in the later years of the policy assuming that she saves about $1,000 for a period of 15 years, the total premiums paid will be $180,000.
She can then expect to receive $266,720 at 65 years . However, at the cost of a lower surrender value, she can withdraw some funds with the withdrawal amount increasing over time. She will be able to withdraw these funds;
- $2,392 yearly during the 1st to 5th year
- $4,784 yearly during the 6th to 10th year
- $7,176 yearly during the 11th to 15th year
- $11,960 yearly during the 16th to 19th year
The total sum withdrawn at the end of her policy maturity date will amount to about $119,600.
Best Insurance Savings Plan for Yearly Cash back Benefits: Aviva MyLifeIncome
The Aviva MyLifeIncome is a flexible insurance savings plan that offers you the choice of receiving yearly cash back from the 5th policy year. This allows you to use your annual cash back to maintain your lifestyle goals such as your monthly dining expenses, overseas trips or to even act as a retirement income.
With 100% of the principle guaranteed, you can choose to collect a single lump sum payout instead. It also allows you to accumulate your annual cash back, which will ensure you get higher returns when you withdraw your savings.
Case study and sample financial illustration for Aviva MyLifeIncome
If Nurul, aged 40, takes the Aviva MyLifeIncome policy while saving $25,000 annually for 10 years, her total premiums paid will amount to $250,000. She also plans to get an annual cash back starting from age 60.
By the time Nurul is 55 years, the surrender value for her insurance policy will be higher than the premiums she has paid. Her projected lifetime yearly income from age 60 will be $22,900. After collecting her yearly income, she can also surrender her MyLifeIncome policy for a guaranteed cash value that will be higher than the premiums she has paid.
Best Insurance Savings Plan for Shortest Premium Term (3 yrs): NTUC Income RevoEase
The NTUC Income RevoEase is a short-term insurance savings plan that requires you to pay premiums for the first 3 years of the policy. The policy has a fixed maturity period of 10 years and provides a boost to your savings to help you meet your short-term and mid-term financial goals. Moreover, you are assured of 100% of the principal upon maturity of the policy.
Case study and sample financial illustration for NTUC Income RevoEase
Let’s say Frederick, aged 50, takes a NTUC Income RevoEase policy while saving $20,000 per year and a saving period of 3 years. His guaranteed surrender value at the end of 10 years will be $62,964 with a projected surrender value of $79,708.
What other options should you consider besides an insurance savings plan?
Insurance savings plans, commonly referred to as endowment savings plans is one of the best investment plans recommended by many financial advisers due to high interest on savings. However, depending on your budget, age and even risk appetite, there may be better wealth accumulation options. Some of the plans you that include both coverage and wealth accumulation include
- Whole life plans, which offer lifelong coverage with stable wealth accumulation
- Investment linked policies that offer life coverage with the probability of high investment returns
Whole life plans: An alternative to insurance savings plans
Total premiums paid over a period of time in a whole life insurance plan may accumulate to significant savings. This is especially true if you start to invest while in your 20s or even early 30s. Whole life plans ensure that you not only get insurance coverage but the cash value of your policy increases over time. This cash value can then be withdrawn later on in your life. They also allow you to meet your financial objectives by choosing either a lump sum or a monthly income payout.
In summary, insurance savings plan are a great vehicle that can help you reach your financial objectives, Although many insurance service providers have different plans that offer different features, the products listed above give some of the highest returns. These plans will ensure that you maintain your lifestyle during retirement or that you achieve your financial objectives faster than saving in a bank account over time.