Not only is it durian season, but it’s also apparently the season for short-term endowment plans.
After Great Eastern released their GREAT220 short-term endowment plan just earlier this month, Aviva has come up with a three-year endowment plan called MySecureSaver.
The plan offers 2.25% guaranteed interest per year for three years, which is higher than any bank’s fixed deposit rates and even what the Singapore Savings Bond (SSB) would give you.
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TL;DR: Is The Aviva MySecureSaver Worth It?
The new Aviva MySecureSaver 3-year single premium non-par savings plan is a tranche product (read: limited availability) that is available from today, 28 May 2019 while stocks last.
Key things to note:
- Capital guaranteed: from the start of the 3rd policy year
- Death benefit: pays out 101% of your single premium upon your demise
- Guaranteed issuance: no need for medical check-ups
- Guaranteed returns: 2.25% per annum over 3 years (106.91% of your single premium)
- Single premium payment: Minimum of S$20,000, capped at S$1million using cash or your SRS funds
- Policy protection: up to specified limits by SDIC
A Closer Look At Aviva MySecureSaver
Pros Of Aviva MySecureSaver
- Capital guaranteed if held till maturity
- You will get back 106.91% of your principal sum
- You don’t need to undergo a health checkup in order to apply
- Relatively low risk as it’s a product by a reputable insurance company
Cons Of Aviva MySecureSaver
- A somewhat large sum of money required – minimum is S$20,000
- There is an early termination charge if you choose to withdraw your plan before reaching the third year
Note: if you’d like to find out more about Aviva MySecureSaver, click here to read more.
How Does MySecureSaver Work?
Let’s say you want to save up for the down payment of a new HDB BTO in three years’ time and you want something with a lower risk that can grow your savings.
Assuming your flat costs S$400,000. You’re looking at S$40,000 (or 10% downpayment) if you’re planning to pay for it in cash.
If you put in the minimum S$20,000, you’ll get S$21,382 (106.91% of your premium).
But if you (and maybe your partner chips in S$40,000, you’ll get S$42,764.
That’s S$2,764 that you can put towards your home renovation cost or furniture for your new place.
In the unlikely event of your demise, however, the plan pays out S$40,400 (101% of your premium, assuming $40,000).
How Do I Purchase The Aviva MySecureSaver?
Unlike other endowment plans which only accept cash, you can choose to use cash or Supplementary Retirement Scheme (SRS) monies to buy Aviva’s MySecureSaver. Considering that the SRS only gives you 0.05% p.a., MySecureSaver’s 2.25% returns p.a. sure looks good…
The minimum premium is S$20,000, while the maximum premium is S$1million.
Just in case you’re wondering, a single premium of S$1million nets you $1,069,100 after three years.
Also, this endowment plan is only available through Aviva direct and probably selected licensed financial advisors – check with yours to find out if they have access.
Aviva MySecureSaver In Comparison To Singapore Savings Bonds (SSBs)
When it comes to low-risk investments, the benchmark that most Singaporeans have would be SSBs. So let’s take a look at how MySecureSaver stacks up against SSBs.
Well, it’s not rocket science.
Assuming you choose to withdraw your SSB monies on the third year (1.88% p.a. interest), Aviva’s MySecureSaver’s 2.25% p.a. returns definitely beat SSB’s hands down.
Note: Figures are accurate as at 28 May 2019
And yes, your capital is SDIC guaranteed. But it sure as hell can’t beat the fact that the SSBs are government-backed.
However, considering that MySecureSaver is an endowment plan, you’ll need to pay some form of early termination fee if you suddenly decide that you need your money before your 3-year lock-in is up.
With SSBs, all you have to do is pay the S$2 transaction fee and voila, you get your money back (note: not immediately, of course, you’ll get your principal and any interest accrued by the 2nd business day of the following month).
What If I Don’t Have $20,000 To Buy Into Aviva’s MySecureSaver?
$20,000 is a lot of money for the average Singaporean.
But fret not.
There’re always other alternatives if you’re looking for low-risk alternatives to invest your money. However, the options listed here all come with different lock-in periods, so choose wisely and consider when you’ll need that money you’re locking away:
- This month’s SSB at 1.88% for 3 years, minimum cash outlay S$500, no early termination charges. More details here.
- Voluntary cash top-up to CPF Ordinary Account (2.5% to 3.5%), Special Account (4% to 5%), and/or Medisave Account (4% to 5%). More details here.
- CIMB Fixed Deposits at 1.9% p.a. More details here.
- High yield interest rate savings account. More details here.
- Check out alternative investment options in this guide here.
Should I Buy Into Aviva’s MySecureSaver?
I’ve seen many endowment plans come and go, and they are often marketed as tranche products. Meaning there are only limited slots available for consumers to purchase the product, or it has a relatively small window of opportunity for investors.
This naturally fosters a FOMO (Fear Of Missing Out) mentality that could cloud your judgement, especially when your advisor or agent is telling you that the endowment plan is the greatest invention since sliced bread.
But considering that short-term endowment plans are being offered more regularly than the rate which my wife buys and brings a plant back to our home (read: A LOT), I’d say that even if you decide not to go ahead with MySecureSaver, you’ll soon see another short-term endowment plan – that might be even better – in the future.
If you ask me? Read the terms and conditions carefully. Ask for some time with the product brochure to digest the information and understand what the clauses are before you commit your S$20,000 or gasp S$1million.
After all, nobody cares about your money more than you do.
Except maybe your mom and dad. They love you.
Have you called your parents to ask them how they are today? Take some time out and give them a call. They’ll appreciate it even if they say they don’t. 🙂
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