Singapore is one of the most expensive cities in the world and with the new GST rate of 9% coming in the future, it is bound to get more expensive.
When it comes to savings, a general lamentation towards it is that savings plans tend to be very long term. There are a couple of mid term savings plan in the market and they do give decent returns, as insurers are constantly adjusting and gearing their products to suit market needs. To prevent yourself and your family from suffering from an affordability crisis, here are some savings plan that can allow you to save mid term without incurring unnecessary risks.
Head to Head Analysis 12 Year Savings Plan
Suppose David, a male non-smoker who will turn 31 on his next birthday and is considering either Manulife Spring, Aviva MyEasySaver or AIA SmartGrowth(II). In the table below, we present you the various benefits he gets under each of these plans.
|Manulife Spring||Aviva MyEasySaver||AIA SmartGrowth(II)|
|Premium term||6 (Default Option)||12||12|
|Annual Premium||$5, 555.55||$5, 068||$2, 861.95|
|Maturity Amount||$33, 565 (Guaranteed)
$43, 344(Projected at 4.75% return)
|$38, 500 (Guaranteed)
49,501 (Projected at 4.75% return)
$50, 368 * (Projected at 4.75% return)
|Cash Benefit Rate of Return: Accumulated||1.48% (for investment returns of 3.25%)
2.84% (for investment returns of 4.75%)
|0.84% (for investment returns of 3.25%)
2.18% (for investment returns of 4.75%)
|Cash Benefit Rate of Return: Paid Out||1.48% (for investment returns of 3.25%)
2.79% (for investment returns of 4.75%)
|0.62% (for investment returns of 3.25%)
1.92% (for investment returns of 4.75%)
|Total cash benefits withdrawn||$33, 330||$15, 750||Not applicable|
|Death benefits (Cash Benefit Paid Out Option)||$35, 000 (Guaranteed)
$44, 779 (Projected at 4.75% return)
|$43, 924 (Guaranteed)
$54, 925 (Projected at 4.75% return)
|$35, 000 (Guaranteed)
$50, 368 (Projected at 4.75% return)
|Total Premium||$33, 330 (based on 6 years premium term)||$60, 816||$27, 636|
* = Maturity amount for AIASmartGrowth will be paid after 18 years.
Policy Highlights & Comparisons
What we like
- Highest guaranteed maturity amount –Aviva MyEasySaver plan offers a guaranteed maturity amount of $38, 500 which is higher than the maturity amount offered by Manulife and AIA. Take note this is because of the lowest overall cash benefit withdrawn.
- Highest guaranteed deathly benefits –Aviva MyEasySaver plan leads the way in offering the highest guaranteed death benefits, totaling to $43, 924. This is 25% higher than the guaranteed death benefits offered by Manulife and AIA.
- Slightly more flexible – Aviva MyEasySaver plan offers you more flexibility compared to insurance plans like Manulife by offering its users to avail cash benefits by the end of second policy year. This can keep your savings more liquid and help you keep cash for an emergency.
- Highest death benefits – Aviva’s death benefits are also more generous than that of its peers. Given its premium, the death benefits Aviva shells out makes this plan an extra boost in coverage for people whom are looking to save.
What we don’t like
- Expensive premium – While Aviva MyEasySaver plan offers attractive benefits, it charges an extremely hefty premium. For a 12 year window, the total premium $60,816 paid is almost double the premium paid for Manulife Spring and AIA SmartGrowth(II). If costs are an important factor for your consideration, this plan might not be right for you because of the sheer size of premium coupled with the duration through which you have to pay it.
- Minimal cash benefits – For a plan that charges such expensive premium, the cash benefits offered by Aviva MyEasySaver plan are quite dismal. With a mere $15,750 given in cash benefits, this plan fails in giving attractive schemes that makes life easier for users.
A first of its kind in the market, Manulife Spring’s premium term by default is only 6 years. The remaining 7th to 12th year’s premium will be covered by the cash benefit as it will amount to be the same as the premium that you are paying. Effectively earning on the interest yield from the par-fund mainly while paying for 6 years. This is a different structure from the usual Limited Pay 5 (years) pay 10 (total policy term) saving plans.
What we like
- Lowest premium term – One of the biggest benefits of this mid-term savings plan is that it gives you the option to pay premium for only 6 years (Default option). This can be a huge source of savings and relief from stress as it shortens the duration for which you need to pay the bill.
- Highest cash benefits –By giving you the option to avail cash benefits from 7th year onwards to an amount that’s equal to your premium, Manulife Spring gives you the most attractive offer when it comes to providing value for the money invested. This also sets it apart from its other competitors in Singapore who don’t offer such high cash benefits annually. Of course if you choose not to withdraw the cash benefit, you may continue putting the premium and revert to a usual 12 years premium savings plan.
- High cash benefit accumulation –Manulife Spring plan also provides you with an option to reinvest your cash benefits to its plan. This can be a great way of saving more money at the end of your maturity period. Reinvesting your cash benefit could provide you with a maturity value of $73, 464 (assuming 3.25% returns) and $80, 358 (assuming 4.75% returns).
- Best investment returns in a 12 year time period – While AIA SmartGrowth (II) offers higher maturity returns, the total length of that plan is 18 years. If you want to avail your savings in cash by the end of 12 years – the Manulife Spring plan is a better option. This is because it has a lower maturity number of years term, lowest premium term, highest cash benefit and adequate maturity amount.
What we don’t like
- Lowest guaranteed maturity amount –Offering a guaranteed maturity amount of $33,565,. While Manulife’s plan’s maturity amount is smaller than that of its peers Aviva and AIA. If you’re someone who doesn’t like to depend on market movements for his savings, this could be something not for you.
- Lowest guaranteed death benefits – Offering guaranteed death benefits of $43,924, Manulife’s plan’s death benefit pales in comparison to that of its peers Aviva and AIA.
- Later Cash Benefit – Though highest, Manulife Spring’s cash benefit also came latest. Due to the structure of the plan, you are only eligible for the cash benefits from the 7th year while for other insurance plans offers to let you avail the cash benefits from your third year. This could prevent you from saving enough for an unseen emergency.
What we like
- Cheapest premium – Compared to its peers, AIA SmartGrowth offers the cheapest premiums by a long shot. Its annual premium at $2,861.95 is approximately less than half the annual premium for Aviva and Manulife. This makes this plan quite cost friendly. If you’re someone who doesn’t prefer to spend a lot of money on savings plan at one go, this could be the right plan for you for a 12 pay 18 plan (limited pay).
What we don’t like
- Longest policy term –While AIA’s plan might be cheaper, you’d have to be very patient to enjoy some of its benefits given that the policy term is a surprising 18 years. There are two other options of 21 and 24 years policy term. This could really make this plan inconvenient for a lot of users who believe they can get better returns over such long period in the financial markets. If you’re someone who doesn’t prefer or doesn’t have the patient to wait for your returns on such long-time horizon, this plan might not be right for you.
- No option for cash benefit withdrawal – Another huge drawback of this plan is that it doesn’t offer its users the flexibility of availing cash benefits after certain periods of time. What this means is that the money you’ll be putting in this plan will be locked away throughout the duration of this plan. If you’re someone who wants to allow or some money on the side in cases of emergency, this clause might be worth looking into further.
- Lowest Returns – Although AIA’s maturity figure amounts at $50, 368 (assuming 4.75% return), while they seem higher than the maturity amount offered by Aviva and Manulife, keep in mind that AIA’s plan is 18 years in this scenario, as well as no cash benefit has been withdrawn at all, with both Manulife and Aviva’s cash benefit have been withdrawn every single available year. Not to mention AIA’s investment returns in the past has been a rocky one, so take this with a pinch of salt because it is projected at a high return
Conclusion For Manulife Spring VS Aviva MyEasySaver VS AIA SmartGrowth(II)
All 3 plans here have one thing in common: they are of mid term of around 12 years. We hope the analysis helps you in understanding the pros and cons of these 3 mid term savings plans in the market so that you can decide if any of these options meet your savings objectives. All savings plans have their own advantages and disadvantages. We recommend that all individuals choose their savings plans keeping in mind their objectives and liquidity needs to ensure they get the best possible value.
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