The Ultimate Guide to Endowment Plans in Singapore

💡 What if you could save money, grow it steadily, and get guaranteed returns—all without constantly worrying about market fluctuations?

Saving money can feel like a balancing act—you want security, but you also want growth. If you're looking for a structured, low-risk way to build wealth while earning more than a savings account, an endowment plan might be worth considering. 

These plans combine disciplined savings, guaranteed returns, and potential bonuses, making them a popular choice for those who prefer certainty over risk.

But are they right for everyone? Endowment plans come with lock-in periods and specific payout structures, meaning they’re best suited for savers with clear financial goals—whether it’s planning for retirement, a child’s education, or a major life milestone.

They also sit somewhere between savings accounts, fixed deposits, and investment-linked products, offering more growth than traditional savings while being less risky than investments. Throughout this guide, we’ll break down how they work, who they’re best for, and how they compare to other financial tools you might be considering.

What is an endowment plan?

An endowment plan is a hybrid financial product that combines insurance protection with a structured savings component. It’s designed to help policyholders accumulate wealth over a fixed period while ensuring a safety net through life insurance coverage.

At its core, an endowment plan pays out a lump sum at maturity—usually after 3, 5, 10, 15, or 20 years. However, if the policyholder passes away before the plan matures, the policy’s death benefit is paid out to the beneficiaries. This dual purpose makes it a popular choice for those seeking disciplined savings with a layer of financial protection.

How does an endowment plan work?

When you pay a monthly premium, part of it goes toward life insurance coverage, while the rest is invested to generate returns. For example, out of a $250 monthly premium, around $100 may be allocated to insurance, and the remaining $150 is directed into savings or investment funds managed by professionals.

Endowment policies are usually issued by life insurance companies and may be structured as standalone plans or as part of whole life insurance policies. In fact, many whole life plans in Singapore contain an endowment-like feature, which contributes to their higher premiums compared to term insurance.

Because of these investment and savings components, some people view endowment-linked whole life policies as more than just protection—they see them as long-term wealth accumulation tools.

Endowment plan glossaries

What are the types of endowment plans available in Singapore

Endowment plans in Singapore are not one-size-fits-all. They come in various structures depending on your savings preferences, investment goals, and desired policy duration.

Here’s a breakdown of the common types of endowment plans based on payment structure, term, investment participation, and flexibility.

1. Based on premium payment structure

Endowment plans can be funded either with a one-time payment or through regular contributions. Your choice depends on whether you prefer to invest a lump sum upfront or spread out your savings over time.

2. Based on policy term

Whether you're planning for a near-term goal or a long-term milestone, the tenure of your plan should match your financial timeline.

3. Based on investment participation

Some plans let you benefit from the insurer’s investment performance, while others offer fully guaranteed payouts.

4. Based on payment duration

Some plans let you finish paying premiums early while keeping your policy active till maturity.

What is a short-term endowment plan?

With low interest rates offered by traditional bank accounts, more Singaporeans are turning to short-term endowment plans as a smarter way to grow idle cash. These plans are designed to deliver fixed returns over a few years—typically between 2 to 6—while offering a small layer of insurance protection.

Despite being issued by insurance companies, short-term endowment plans are better seen as structured savings products. You pay a one-time premium, lock in your money for the agreed term, and receive a guaranteed payout at the end—often higher than what fixed deposits can offer. 

Many of these products are capital-guaranteed at maturity, which means your principal is protected if you stay invested for the full duration. 

Should you consider one?

Short-term endowment plans strike a balance between safety and returns. They’re particularly suitable if:

• You want better interest than a fixed deposit but still want capital protection.
• You have spare funds you won’t need in the short term.
• You want a simple, low-risk savings product with defined outcomes.

However, these plans still require commitment. If you withdraw before maturity, you may walk away with less than what you put in. Also, if interest rates rise during your holding period, your funds will be locked in and unable to benefit from higher-yielding options.

Best short-term endowment plans in Singapore

Short-term endowment plans are ideal for individuals who prefer liquidity and lower commitment. These plans often have a policy duration of 1 to 5 years and are typically funded through a one-time premium. 

They offer guaranteed returns and are seen as fixed deposit alternatives for wealth accumulation over a short period.

** please reach out to the respective insurer to confirm on the tranche availability

What is a mid to long-term endowment plan?

Mid to long-term endowment plans are designed to help you build wealth gradually while providing a layer of insurance coverage. 

Unlike short-term plans that mature in just a few years, these plans typically have a policy term ranging from 10 to 25 years or even 30 years —making them suitable for retirement planning, children’s education, or other long-term financial goals.

These plans operate mostly on a regular premium basis, meaning you commit to making monthly, quarterly, or yearly contributions for a set number of years. 

Your premiums go toward both life insurance coverage and the insurer’s participating fund, which aims to deliver returns through long-term investments in bonds, equities, and other assets.

Should you consider a mid to long-term endowment plan?

A long-term endowment plan may be a good fit if:

• You’re saving for major milestones like retirement, your child’s university fees, or a future downpayment.
• You prefer forced savings discipline with a known time horizon and potential for upside.
• You want a plan that comes with capital guarantees (typically after a certain number of years), along with life insurance coverage.

That said, these plans are not flexible. Missing premium payments or surrendering the plan early can result in financial losses. You should only commit to a long-term endowment if you’re confident that you won’t need the funds in the short term.

Best long-term endowment plans in Singapore

Long-term endowment plans serve larger financial goals like retirement or your child’s tertiary education. These plans offer both guaranteed and non-guaranteed returns, with many incorporating bonus mechanisms and capital guarantees after a few years.

** please reach out to the respective insurer to confirm on the tranche availability

What to Know Before Committing to an Endowment Plan

Endowment plans can offer the dual benefits of long-term protection and disciplined savings — but they’re not one-size-fits-all. 

Before locking yourself into a policy that could span decades, it’s important to consider a few key aspects that affect both your returns and flexibility. Here's what you need to weigh up:

Capital guarantee at maturity

Some endowment plans offer 100% capital guarantee upon maturity, meaning you’ll get back at least what you paid in premiums. However, this guarantee only applies if you hold the policy until its full term. 

Plans with capital guarantee are ideal for risk-averse individuals, but they may come with slightly lower potential returns compared to those with more market exposure.

Understand total distribution cost (TDC)

TDC refers to the portion of your premiums used to cover commissions and administrative costs — essentially the fee you pay for getting advice or purchasing through an advisor. 

While it doesn’t affect your guaranteed benefits, high TDCs can reduce your non-guaranteed returns. Always review your policy’s benefit illustration to understand this cost breakdown.

Limited pay, lifetime cover

Some plans offer limited pay periods — for instance, paying premiums for just 10 or 15 years while enjoying coverage and capital growth till age 100. This structure is beneficial if you want to front-load your savings but still enjoy long-term benefits.

Surrender value — know your exit cost

Unlike term life insurance, endowment plans usually return some surrender value if you exit early. This value consists of a guaranteed portion and a non-guaranteed bonus portion. However, exiting within the first few years often results in a payout lower than your premiums paid, so only commit if you're confident you won’t need early access.

Reversionary vs terminal

Participating endowment plans offer non-guaranteed bonuses which enhance your returns over time. There are two main types:

• Reversionary bonus: Declared annually and added to your policy once vested.
• Terminal bonus: A one-time payout given when the policy matures or is surrendered.

These bonuses depend on the insurer’s investment performance and aren’t fixed. It’s wise to check historical bonus rates provided by your insurer for reference.

Think twice before early withdrawals

Some endowment plans allow partial withdrawals or cash payouts once your policy accrues value. However, frequent withdrawals can reduce your overall returns or result in policy termination. If the policy is meant for retirement or education funding, consider reinvesting your payouts for better compounding.