What is the Yield to Maturity (YTM) a new endowment policy in Singapore?
On average the YTM returns is about 3%pa for a 30 year old male for a 10 year endowment policy.
Shorter term tenure and older folks will have lower YTM.
Our traded policies for similar duration can be up to 4.5%pa. The 1%~1.5% difference in return will be a very substantial amount over a long period. Please refer to our Purvis table for the various YTM of different tenure.
Regular investors will receive a further discount. T&C applies..
Why are the investors in the Purvis traded policies able to achieve the higher returns than the original policyholders?
Life policies are front end loaded ie most of the cost of distribution are paid in the initial years by the original policyholders.
The new owner or investor of the policy enjoy a higher return than the original policyholders since most of the cost is already borne out by the original policyholders.
What is the profile of the investor in traded life/endowment policies?
- Investor likes the asset class diversification as it does not correlate with mainstream asset class Equities and Properties.
- Dislike the returns volatility of the Equity market ie prefer the steady projected returns of the insurer.
- Likes the policy owners’ protection (PPF) scheme administered by Spore Deposit Insurance Corporation. The scheme has been set up to protect policy owners in the event of failure of a life or general insurer which is a PPF member.