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Endowment and whole life policies are two common types of life insurance products offered by insurers. Although they may have distinct purposes and suit different needs, some people may still get confused with the different structures of the two policies. Here’s a brief overview of both plans:
Endowment
Endowment plans is a type of life insurance policy that provides both savings and protection elements.
Dual Purpose: Endowment plans combine insurance coverage with a savings or investment component. A portion of the premiums paid goes towards building cash value, which is payable upon policy maturity or upon the death of the insured.
Maturity Benefit: Upon maturity of the plan, you will receive the maturity benefit, which includes the sum assured plus bonuses or returns accrued over the policy term.
For Savings: This plan also offers a guaranteed return on the premiums paid, along with potential bonuses that are declared by the insurance company based on its financial performance.
Whole Life Policies
Whole life policies, on the other hand, provide coverage for the entire lifetime of the insured individual.
Lifetime Coverage: As long as premiums are being paid, whole life policies provide coverage until the death of the insured.
Cash Value Accumulation: Just like endowment, whole life policies accumulate a cash value over time
Premiums: Premiums for whole life policies are generally higher than term insurance policies because they cover the insured’s entire life and include a savings/investment component.
Estate Planning: The plan is also being used in estate planning because it provides a guaranteed payout to beneficiaries upon the insured’s death, which can be important for passing on wealth or covering estate taxes.
When deciding between endowment and whole life policies in Singapore, we should consider our financial goals, risk tolerance, and insurance needs. Endowment plans are suitable for achieving specific goals with some insurance coverage, while whole life policies provide lifelong coverage and an estate for our family in the event of death. Financial goals may also change over time when our kids grow up, when we have a change in our employment situations or our finances.
Should you face difficulties in coping with the cost of your insurance premiums, you can consider selling your endowment or whole life policies for higher values. Call Reps Holdings at 6221 4771 to find out more!
