How Endowment Policies Can Help You Grow Your Savings?

Markets are shaky right now, and interest rates are at historic lows. And you might be asking how you can keep your money safe while still fighting inflation. Here's how an endowment plan might help you start building your financial portfolio.

A life insurance policy with a savings component is known as an endowment policy. Endowment policies are often set to expire after a certain amount of time has passed. As a result, it's especially helpful if you're trying to meet financial goals that won't be met once your policy matures, such as paying for your child's tertiary school fees or saving for retirement. They're also known as 'Wealth Accumulation Plans' because of this.

The following are some of the key aspects of endowment policies:

• Longer tenures (up to 30 years) are available through an endowment plan.
• There are also whole life endowment plans that provide coverage up to the age of 99 or 100.

How Endowment Policies Can Help You Grow Your Savings?

Below are a few things you must consider so that you can grow your savings with an Endowment plan:

1. Expect A Downturn

Many of us are aware that Singapore is currently dealing with not only the COVID-19 pandemic but also a coming recession. Certain industries, such as travel, tourism, and retail stores, have experienced closures, affecting both business owners and employees. While some may have already been laid off, those of us who have been fortunate enough to keep our employment should reevaluate our spending priorities and begin saving more to protect our finances in the future.

You should consider investing in endowment policies if you currently have at least 6 to 12 months of emergency funds. If you can set aside the funds for the life of the policy, it's a good idea to put your idle cash to work.

2. Increase The Size And Stability Of Your Financial Assets

Not only do you need to save money, but you also need to protect yourself. An endowment plan not only provides you with prospective earnings but also provides you with insurance protection.

Some programs offer not only a 100 percent capital return at policy maturity but also a death benefit of 101 percent of the single premium. Furthermore, signing up is simple because no medical exams are required before purchasing — admission is guaranteed. Now sit back and watch your savings increase!

3. A Tool For Saving In A Low-Interest Rate Situation

One of the most fundamental principles of financial planning is the importance of saving. Having extra cash on hand can frequently assist to lessen the impact of unforeseen occurrences like a long-term illness, a retrenchment, or a decision to take a sabbatical to pursue one's dreams.

While banks pay a low-interest rate on cash deposits, there are a variety of different savings options that can provide greater returns, especially in a low-interest rate climate like the one we're in right now.

4. Fixed Maturity Period

The term "maturity period" simply refers to the amount of time it takes for your money to increase. You will receive a payout of the premiums you paid, plus any bonuses from the plan after it matures.

Endowment plans include a variety of maturity periods, ranging from three to thirty years, depending on the plan. If you're saving for a specific goal, choose a maturity term that allows you to receive your money when you need it. For example, if you're newly married and want to invest in an endowment plan to help pay for your future child's education, you might choose a maturity period of 15-20 years. You may set a maturity period of 30 years for longer-term goals like retirement.

Conclusion

From here on out, life is only going to get more expensive, especially if you apply for a BTO or establish a family. Your future self will thank you for anticipating needs and accumulating wealth at a young age.

There are various ways to save money, and an endowment plan is one of the greatest - especially if you're still in your twenties. Here's everything you need to know about endowment plans, including how to use them to increase your money.

You may also like to read - A Deatiled Comparison Of Endowment Plans From ULIPs

Endowment Or Equities - What Should I Choose?

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.