Last week,we talk about why you should not buy endowment policy, let me now show you the alternative.

Now, let's assume that the insured adopts a "Buy Term Invest the

Difference" approach. From the same company P, the sum assured

is still $100,000 upon death, with a yearly premium of only $266

Buying Term and Investing The Difference

Instead of paying $3,617 yearly to company P for an Endowment Policy,

you pay only $266 per year for a Term Policy. You can invest the balance

of $3,351 in the stock market. From many open literature, the average

annual returns (inclusive of dividends) for Straits Times Index (STI) in

general is about 9.5%.

If you invest $3,351 yearly in the STI, you could potentially gain $506,004

(round numbers) in returns after 30 years (not forgetting the power of

compound interest)

Buy Term and Investing the Difference

At the end of 30 years, your Term Policy would be rendered useless and

you would have lost $7,980 in total. Despite losing $7,980, with your

gain of $506,004 from the stock market your ROI after 30 years would

be 336%!

Buying endowment vs BTID

The post Before you buy any insurance, read this appeared first on Singapore Stock Analysis | Opening Trading Account | Collin Seow.