Passive Income for Life

I think Mike’s post on Endowment Plans was excellent in comparing yield-to-maturity across different plans offered by different providers. Would be a shame if I did not share this information.

I do not really advocate endowment plans because of the cost involved and the opportunity costs of investing the money elsewhere. To me, it is more sensible to buy term insurance and investing the money elsewhere on a regular basis.

But endowment plans can still cater to some people’s needs. They are best for people who satisfy the following criteria:

1. Young
2. Have a lack of discipline to save regularly
3. Prefers simplicity in terms of protection and investment
4. Risk Adverse
5. Prefers to know the minimum guaranteed returns than dreaming about potential upsides

Remember that endowment plans are for the long term. Terminating one before maturity can incur great cost to your future.

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