With so many options available, it can be hard to find the right retirement plan. That's why we've made it…
Single Premium Retirement Plans: Only invest in your retirement once…don’t make the mistake one retiree made.
What’s something we always tell you? If you want to be successful, you can’t make more mistakes. Well, that’s what we learned from one of our company’s (almost) retirees.
He was just like you: a hard worker who wanted to retire in style soon. So he invested his money into his 10-year regular premium payment savings plan. He put in $1,000 every month and watched it grow.
And then 3 years later he was retrenched! Instead of retiring early, he had to keep working for another 7 years until he finally could pay off his saving plan (Because we all know early termination of such policy may result in losses!). If only he had been more informed about his choices!
So don’t make the same mistake—invest only once in your retirement and make sure it’s a good investment!
Single premium annuity plans, or SP for short, are insurance products that allow you to put a lump sum of money into a plan. In return, the insurer promises you a monthly/yearly/maturity payout for limited years or for the rest of your life.
SP annuities are usually a cheaper option than regular premium plans. The biggest difference between the two types of plans is that single premium annuities require a one-time deposit, while regular premium retirement plans allow you to make monthly or yearly deposits or contributions in order to generate future payments.
Single premium plans might be preferable to regular-premium annuities in some situations. However, both types of products have trade-offs. Whether SPs are right for you depends on your particular goals and circumstances. Here’s what you need to know about these products and how they work:
A Single Premium Retirement Plan is an endowment plan that you pay for in a single upfront payment. This upfront payment is commonly referred to as the “single premium”.
Once you have paid the single premium and the policy has been issued, you will typically have to wait for a period before receiving any payments. This waiting period is known as your “accumulation period” and can last anywhere from 1 year to 40 years. During this accumulation period, the insurer will be investing your single premium in participating funds—The main asset classes are local and overseas equities, bonds, property and cash.
The policy then pays out two different types of cash flows:
The payout is relatively higher than what you’d get from other types of endowment such as regular premium policies.
Trying to decide between the different types of retirement plans? Read on to find out which type is best for your needs.
When you’re ready to retire, you need a retirement plan that can help you make the most of your time. With the AIA Retirement Saver, you can take advantage of the below features:
The China Taiping Infinite Harvest policy offers you a lifetime payout. The payout is scheduled for your 5th policy anniversary, and it’s designed to help you protect the legacy that’s most important to you.
If you’re looking for a way to make sure your retirement income will be there for the long haul, Manulife RetireReady Plus is the annuity that’ll help you meet your goals.
Introducing Manulife ReadyBuilder. It’s an insurance product that builds in the flexibility you need to live your best life
A long maturity—you can take it with you if you change jobs or retire early. You can even hold onto it until you’re 120 if you want!
With Income Gro Retire Flex Pro, you can adjust your income payout period anytime before you hit payout age. And if you have a Secondary Life Insured, your policy will continue without interruption.
Introducing the Income Luxe Plus Solitaire, a lifetime insurance coverage that provides monthly cash payouts with a single premium. The plan is suitable for you if you are looking for an added retirement savings or a monthly income during your retirement years.
Building a financial legacy is something we all want to do someday. That’s why we’ve made it easy for you to do so with Income Luxe Plus Solitaire.
If you choose Singlife Flexi Life Income, you will receive yearly payouts and a money-back guarantee. You can also choose to receive higher returns so you can use these extra funds for whatever you wish, whether it be holidays or retirement.
Hey there. If you’re looking for a new savings policy, you just found the right one. With Income Gro Saver Flex Pro, you can choose the term length that works best for you—10, 15, 20, 25, or 30 years or lifetime. And if you want to keep it going even after your death, they’ve got you covered with our Secondary Life Insured benefit! They also waive your premiums if you get TPD and defer them for 6 months in case you get retrenched.
There are three things you need to consider before you sign off on your purchase:
Many people are finding it difficult to find the best retirement plan that is suitable for their financial situation. With so many options to choose from, it’s hard to know where you should even start.
There are two direct ways to invest in a single premium plan:
Many people are not aware that they can get a tax rebate for contributing to a Supplementary Retirement Scheme (SRS) account. The SRS funds can be used to invest in a Single Premium (yes, only Single premium!) insurance plan that allows one to receive an income ideally after the retirement of Age 62.
First of all, congratulations! You have optimized your CPF and SRS, and have some spare cash to invest in a Cash plan.
I’ve written about this before, but it’s worth repeating: The CPF system is a good one. The returns are very competitive for the low risk there’s a variety of options to optimise it to make it work harder for you.
Now, you are looking at the SGD plans which are the default for most people. The plan is about 3-4% returns p.a., it’s not fantastic but you can consider what you will use this money for when calculating whether this is good enough for your retirement fund.
If you are not sure how many years you will live past retirement age or how good you will be in managing your monies during retirement, it might be better not to risk a large amount of your savings in a volatile investment like stocks or unit trust funds.
On the other hand, if you are looking to diversify your investments, you may want to consider the US dollar plan. Your money is invested in a diverse basket of assets including stocks, bonds and cash.
The US dollar-denominated plan offers an attractive combination of good returns and diversification.
There’s no doubt that some people will have difficulty affording their monthly premiums. With a single premium plan, there’s no need to worry about this. The main advantages are:
The advantages of single premium plans are:
No monthly premiums – The main advantage of single premium plans is that there are no monthly premiums to pay. If worry about whether you’re able to afford the next month’s premium or if you’ll be able to set aside enough money every month to cover it, this is a great alternative.
Higher returns – Finally, a single premium plan generally results in higher investment returns. Single payments tend to be cheaper than monthly payments, and therefore can result in higher returns over time.
Get your payouts faster –Some of the best single premium plans can even provide for an immediate payout, while others offer up to an early pay-out in just one or a few years. The extra cash can help you achieve your regular income goals faster.
Ultimately, finding the best SP plan for you means doing your research. You can begin by looking into the ones we’ve reviewed here and in our previous articles. If a company offers what you need, and you feel comfortable investing with it, then that’s great. Otherwise, keep looking because you never know what you might find!
What are your goals?
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