Yield of 4% p.a. on endowment plan

Dear Mr Tan,

I bought a 13-year endowment with compound reversionarly bonus from Great Eastern. The basic sum assured was $60,000 and annual premium was $5096.

I received an amount on maturity of $88,547. This means that I earned only $22,302 or 2.6% p.a. In your opinion, is this a fair deal?

-----------------------

REPLY:

Your yield is actually 4.06% p.a. You have to consider that your total premium is paid annually over 13 years, and not in a lump sum at the beginning.

It is a fairly attractive yield. You also enjoyed life insurance for the past 13 years, without making any separate payment for this coverage.