Endowment Plan is sold by many insurance agents as a saving products. Customers are easily to be persuaded. I believe most people want to save money and get good returns from their savings and they are willingly persuaded by insurance agents and bank staff to commit in endowment plan.
Our trainers in insurance companies will teach us not to mention 'insurance products' when we sell endowment plan. It should be addressed as 'saving plan'. I try but I give up cheating myself because insurance is always insurance. If the primary element of an insurance product is not insurance, then something is wrong.
Anyway, the reasons that I don't encourage endowment plan as a financial planner due to the following:
1. Once you have committed, you must faithfully pay for the duration of the payment term. As like other insurance products, the distribution cost for the first few years are expensive. Once you stop, you lose what you have paid before.
2. It is unlike saving in the bank if the sales person try to compare with the bank deposit returns. You can't withdraw your money for the 'money saved' (premium) in your endowment plan, while you won't lose your capital in the bank saving account.
3. The sum assured is very low
4. An endowment plan projects high returns. If you only take the guarantee maturity value into consideration, it is quite similar to putting money in FD.
Worst still, many of the 'cash return' insurance products are package whole life. What is the point of locking your money with insurance company and getting the annual 'cash return'? The 'cash return' shrinks every year because the value of the same amount money depreciates over time.
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