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If you are serious in planning for your children’s University Education with an Endowment Plan, do you know that beside the traditional or usual types of plans that ask you to:
- Pay For ‘X’ number of years for the same ‘X’ years of coverage term
- Pay For ‘X-5’ number of years for ‘X’ years of coverage term plus the option to withdraw a certain percentage of the Sum Assured for the last three years (meant as a form of using it to service the child’s first year followed by second to third year of university education)…
There’s another type of Limited Pay Endowment Plan that allows you to service like 5 years only and the plan continues to the end of the coverage term (and most importantly… the maturity return can be like 40% – 60% potentially higher than those plans mentioned above)?
If you are unaware and you are interested to know more, do continue to read on…
What You Need To Know About This Type of Limited Pay Endowment Plan
As mentioned, the main attractive feature of this type of Limited Pay Endowment Plan is that you need to service like 5 years of Premium Term and the plan continues to enjoy the insurance company’s annual bonuses till the end of the coverage term (usually in the range of 15 years and beyond)
The next attractive feature is that the returns can be potentially higher than most of the usual endowment plans, including those termed as Education Funding Plans. And this is despite the fact that the total premiums paid for this versus others are mostly the same!
How Can This Type Of Limited Pay Endowment Plan Get You Potentially Higher Return?
If you are unaware… the CPF Board has just increased the Minimum Sum amount for 2012 which means that if you are in that particular eligible group – you have to ensure that your retirement account must be at least at the stated amount.
And if you are sighing and complaining that this is unfair… this trend is here to stay and I have also shared in my previous post on the rationale behind this annual increment.
So What Can You Do To Help Grow Your CPF Account And Better Prepare For Retirement?
For a start, at this point of writing, the economy is not in a good state and there’s a recent report that almost majority of CPF monies that have been taken out to invest (in plans like Unit Trust or other form of Equities) have yet to make profit (means these people are losing money) – which is a dangerous sign!
Why You Should Not Invest In Unit Trust With Your CPF Monies If You Are Not Too Sure Of The Future?
If you are currently served by a Financial Planner who is very keen to sell you some Unit Trusts using your CPF Monies -do you know that he/she gets to earn a one-time commission fee (certain percentage from the initial amount) and a trailer fee (certain percentage from the onset value, e.g. the amount after every 3 months period). And these fees are deducted regularly (until you decide to terminate) regardless of the economy. Therefore if your Unit Trust Fund is not performing and fees are deducted… it will just get harder for you to break even and make a profit!