Policy maturity vs DIY investing.
Better outcome
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Policy maturity
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DIY investing
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Your breakdown
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What policy charges quietly cost you
An endowment or investment-linked policy looks like a savings plan, but in the early years a large slice of your premium goes to distribution cost, the agent’s commission, and mortality and administration charges rather than into your fund. That is why the surrender value in years one to three is often far below what you have paid in. The illustrated maturity an insurer shows you is already net of these charges, which is exactly the figure this tool asks for in the projected maturity field. Your job is to compare that single guaranteed-plus-projected number against what the same money would have done in a low-cost portfolio you ran yourself.
This calculator is for the person staring at a benefit illustration, wondering whether the 20-year endowment their relationship manager pitched is genuinely a good deal or just a tidy way to lock away savings. It does not judge the insurance value, only the money.
Running the same $500 a month yourself
The tool does not assume you hand over the whole annual premium on day one. It takes your annual premium, splits it into twelve equal monthly contributions, and grows the balance month by month at your chosen return divided by twelve. So a $6,000 annual premium becomes $500 invested every month, compounding monthly. This mirrors how most people actually fund a regular savings plan or a monthly investment into an index fund, and it is more honest than an annual lump-sum assumption that would flatter the do-it-yourself side.
Twenty years, side by side
Take the defaults: a $6,000 annual premium for 20 years, an illustrated policy maturity of $160,000, and a 6 percent annual return if you invest yourself. The policy hands you $160,000 at the end. The do-it-yourself route, contributing $500 a month at 6 percent compounded monthly, reaches roughly $231,020. The gap is about $71,020 in favour of investing the premium directly.
Drop the do-it-yourself return to 4 percent and the picture narrows: $500 a month for 20 years grows to about $183,387, still ahead of the policy but by a far smaller margin. The whole comparison swings on the return you can realistically earn after costs, so be conservative rather than optimistic with that input.
The guaranteed portion you give up
This is the honest caveat. A participating endowment usually carries a guaranteed maturity floor plus non-guaranteed bonuses, and many policies bundle a death or total permanent disability benefit. The do-it-yourself route offers neither a guarantee nor cover. If the projected return does not materialise, your fund can finish below the policy’s guaranteed sum. So the right read is not simply that investing wins, but that you are trading a guarantee and some insurance for higher expected growth and full liquidity. A common mistake is buying an endowment for the savings and treating the small attached cover as your life insurance. It almost never is enough. Keep your protection in a cheap term policy and decide the savings question separately.
Singapore’s tax angle most people forget
One quiet advantage sits on the do-it-yourself side. Singapore has no capital gains tax, so the growth in your own portfolio is not taxed when you sell, and under the one-tier system dividends from Singapore companies are paid out of already-taxed profits and are not taxable again in your hands. The insurer’s fund is not taxed in your hands either, so tax is broadly neutral between the two routes. What is not neutral is cost: the charge drag inside a bundled policy is the single biggest reason the do-it-yourself column tends to finish higher. My practical tip is to ask for the policy’s reduction-in-yield figure, the number that shows how much annual return the charges consume, and feed a do-it-yourself return that already nets off your platform and fund fees so you are comparing like with like.
Should I surrender an endowment I already hold?
Not reflexively. Because the heaviest charges are front-loaded, the early surrender penalty is steepest in the first several years, and your money has already paid for cover you used. If you are past the break-even point and the policy is on track, surrendering can crystallise a loss that the remaining years would have recovered. Run the numbers on the surrender value you are quoted today versus the projected maturity before deciding.
Does an investment-linked policy change this comparison?
An ILP usually carries higher and more visible charges than a participating endowment, and the entire fund value is exposed to markets with no guarantee, so the same logic applies more sharply. Enter the insurer’s projected value in the maturity field and pick a do-it-yourself return after fees. The cost gap on an ILP is often wider, which is why so many holders eventually move to a low-cost portfolio for the savings and a term policy for the cover.