Low cost endowment plan

Dear Mr Tan,

Are there any low cost endowment plan? I like to get a secure return of about 4% per annum, and have life insurance cover built in as well.

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REPLY:

You can buy a single premium endowment plan. It should give you a return that meets your target. The upfront charge is usually less than 3% of the single premium. This allows the policyholder to earn a good return (after deducting the charges).

I am not aware about any monthly premium endowment plan that are designed to be "low cost". It is possible for this plan to be designed with an upfront charge of (say) 20% of the annual premium. This will give a good return to the policyholder. There will be a good market for this product.

Most endoment plan that are now in the market have an upfront charge that take away one year's of premium. The net return is poor.