6 Dec - 4 min read
These days, it is so much easier to spend money. With just a few taps on your smartphone, you’d have made a purchase and the item will be at your doorstep within a few days. What’s worse, targeted ads pop up almost everywhere we go online, tempting us to impulsively purchase things we don’t actually need.
Combine those with the rising cost of living, it’s no wonder why saving money is becoming more difficult. One option that you can consider to help put your savings plan back on track is an endowment plan, a savings-based insurance policy that offers competitive guaranteed returns while providing you with basic insurance protection.
For example, the new eSaver by AXA is an affordable endowment plan that offers guaranteed cash endowments of up to 8% per annum, a lump sum guaranteed maturity benefit of up to 105% at the end of the policy, and basic life insurance protection.
Let’s take a look at how an endowment plan such as eSaver by AXA helps you kickstart your savings plan.
Most people save money in a bank account or in a fixed deposit, as those are the most convenient options. But this convenience also means the funds can be easily withdrawn if you wish to do so. On top of that, even the best fixed deposit accounts right now don’t offer meaningful returns that can beat inflation rates.
An endowment plan encourages you to save in a disciplined manner through regular premium payments within a policy term and rewards you for it. As such, it helps you grow your savings while also giving you pretty competitive returns as well as basic insurance protection. Like other insurance plans, premiums can be set to be auto debited from your savings account, so this can automatically allocate a portion of your salary for savings.
With eSaver by AXA, policyholders are free to opt for any premium amount from RM500 to RM24,000 (in multiples of RM100) per year to start saving, making it a relatively affordable option. What’s more, this five-year policy has a four-year premium payment term, which means you only pay for four years but enjoy further guaranteed cash endowment (GCE) in the fifth year alongside the death coverage.
With an endowment plan, you’re required to pay a fixed amount regularly over a period of time and at the end of the policy term, you will receive a lump sum payout of the total premiums paid plus an additional lump sum bonus. In between, policyholders will also be rewarded with GCE amounting to a percentage of the annual premium paid.
What’s more, eSaver by AXA’s GCE increases every two years, with a maximum 8% of your annual premium on the fifth policy year.
|Guaranteed Cash Endowments|
|End of Policy Year||1||2||3||4||5|
|% of Annual Premium||2%||2%||4%||4%||8%|
As for the lump sum payout, it will be distributed upon the policy’s maturity at the end of the fifth year, of up to 105% of the total premium paid.
To illustrate, if a policyholder opts to save RM12,000 a year with eSaver by AXA, he or she will earn RM2,400 in GCE (paid out at the end of each policy year), and a lump sum payout at the end of the policy of up to RM50,400 (RM48,000 savings and a 5% bonus). In total, eSaver by AXA would pay out RM4,800, as compared to RM4,652.84 in a theoretical 12-month fixed deposit at a rate of 2.5% p.a.
An endowment plan also provides basic insurance protection, providing your loved ones with a lump sum payout if you pass away within the policy period. eSaver by AXA provides coverage for death whereby your nominee will receive up to 108% of total premium paid in the unfortunate event of your demise. It also offers guaranteed acceptance which means that everyone can start saving without the hassle of answering medical questionnaires or a medical check-up.
However, it must be noted that this is only a basic life protection policy, so it is best to have a separate life insurance plan with a death benefit that matches your income and lifestyle.
Now that you’ve learned more about an endowment plan, you can consider it as a viable way to kickstart your savings plan with high-interest returns while getting some insurance protection. We know that many of you may still be wary of leaving your home and are practising social distancing measures, so here’s another bit of good news: you can sign up for eSaver by AXA digitally from anywhere and start saving with guaranteed returns of up to 8% per annum today.
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