Insurance
My Child’s Education Endowment Policy
By The Bedokian Portfolio  •  December 8, 2023
When our children were born, we heeded the advice from a colleague on purchasing an education endowment policy for them. Back in 2003, we had purchased a 20-year policy term. The savings amount was SGD 995.55, with the accompanying riders of SGD 73.78, bringing the total annual premium to SGD 1,069.33. The premium payment would stop at year 17, after which in years 18, 19 and 20, the guaranteed portion (cash survival benefit) of SGD 15,000 would be paid out SGD 6,000, SGD 6,000 and SGD 3,000, respectively, with year 20 saw the additional payout of the non-guaranteed component. In totality, the amount of premiums paid was SGD 1,069.33 x 17 = SGD 18,178.61, while the total guaranteed and non-guaranteed amount was SGD 26,558.48. This represented a value return of SGD 8,379.87, which in very simplistic annualized return (i.e., taking the paid value and end value for calculation), it would be 1.91%. However, if we only focus the savings portion and treat the riders as costs, the annualized would be 2.28%. Note that we did not reinvest the first two...