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How an endowment plan works in Singapore

An endowment plan is a savings policy with life cover: you pay premiums for a set term, and the insurer pays a lump sum at maturity, made up of a guaranteed amount and, for a participating plan, bonuses that are not guaranteed. If the life assured dies during the term, it pays a death benefit instead.

Last reviewed 15 October 2026 · General information, not financial advice. We don't sell insurance.

The parts of an endowment savings plan

Every endowment plan is built from the same pieces. Your policy schedule and benefit illustration show each one for your plan.

Premium term

How long you pay: every year of the term, for a shorter limited period, or once as a single premium.

Policy term and maturity

When the plan ends and pays out. Terms range from a few years to more than 25.

Guaranteed benefits

The guaranteed maturity benefit and guaranteed cash values. These are promised in the contract.

Non-guaranteed bonuses

On a participating plan, yearly reversionary bonuses and a terminal bonus at the end, set by the insurer each year. How bonuses work

Death benefit

Paid if the life assured dies before maturity, usually the higher of a set sum and the value built up.

Surrender value

What you get if you end the plan early. It is usually lowest in the first years. Surrender value explained

Guaranteed and non-guaranteed returns

The guaranteed part is fixed when you buy. The rest depends on how the insurer's participating fund performs, and the insurer can change future bonuses each year.

To show what the plan might pay, every benefit illustration for a participating policy projects it at two illustrated investment rates of return. Since 1 July 2021, the Life Insurance Association has capped those rates at 4.25% for the higher one and 3.00% for the lower one. Neither is a promise. How to read a benefit illustration

20-year endowment, S$2,000 a yearIllustration

Total premiumsS$40,000

Guaranteed at maturityS$38,000

Projected at 3.00%S$48,000

Projected at 4.25%S$54,000

Figures are an illustration, not a real plan. Only the guaranteed line is promised.

Types of endowment plan

The names differ by insurer, but most plans sold in Singapore fall into one of these. To see how a named plan works, look it up in our plan directory.

Type	How you pay	What you get	Watch for
Regular-premium participating endowment	Premiums every year of the term	Guaranteed maturity benefit plus non-guaranteed bonuses	Low surrender values in the early years
Limited-pay endowment	Premiums for fewer years than the term	As above, with the paying done early	Larger premiums while you pay
Single-premium endowment	One lump sum	A maturity value that is often mostly guaranteed	Money tied up until maturity
Short-term guaranteed savings plan	Usually a single premium, for a few years	A fully guaranteed maturity amount, often non-participating	Sold in limited tranches; leaving early may return less than you paid
Payout or cash-back endowment	Regular premiums	Yearly or periodic payouts as well as a maturity sum	Payouts left with the insurer earn non-guaranteed interest
Education endowment	Regular premiums, timed to a child's age	A sum when the child reaches university age	Usually owned by the parent. A policy your parents bought

How to compare endowment plans before you buy

Questions that apply to any plan, whoever sells it. Participating or non-participating?

Guaranteed maturity value against total premiums
The guaranteed part alone tells you the least you will get back at maturity.
The projection at both rates
Plan around the lower one. The higher one is not promised.
Surrender values year by year
The benefit illustration shows when the surrender value first passes the premiums paid. Break-even year explained
The distribution cost
The benefit illustration shows what goes to distribution each year, which is why early values are low.
When you will need the money
Match the maturity date to the goal. Ending a plan early is the most common way to lose money on one.
What happens if you stop paying
Check whether the plan can become paid-up, and when it would lapse. Stop paying premiums

If you already own an endowment plan

Most of the cost of an endowment is front-loaded, so ending one early often returns less than the premiums paid. If you no longer want yours, compare every option first.

Keep it to maturity

You receive the guaranteed sum and any bonuses. Your cover continues.

Sell it

A buyer may pay more than the surrender value for a participating endowment paid in cash. Sell an endowment

Surrender it

The insurer pays the net surrender value and the plan ends. Surrender an endowment

Endowment plan questions

What is an endowment plan?

A savings policy with life cover. You pay premiums for a set term and receive a lump sum at maturity, or your beneficiaries receive a death benefit if the life assured dies first.

Is an endowment plan worth it?

It suits money you won't need before maturity, and savers who want part of the return guaranteed. If you might need the money early, low early surrender values are the main risk.

Which is the best endowment plan in Singapore?

There is no single best. Compare the guaranteed maturity value, the projection at the lower rate, early surrender values and the term against your goal. We don't sell or rank plans.

What is the difference between an endowment and whole life?

An endowment has a fixed term and pays out at maturity. Whole life covers you for life and builds a cash value, with no set maturity date. Whole life policies

Can I cancel a new endowment plan?

Within the free-look period, usually 14 days, you can cancel and get your premiums back, less some costs such as medical examinations. Free-look cancellation

Can I sell an endowment plan I no longer want?

Often, if it is a participating plan paid in cash and past about a third of its term. You see our offer beside your net surrender value.

Sources

Thinking of ending an endowment early?

Check whether we would buy it before you surrender. No NRIC, no obligation.

Check my policy