By Shawn Lee
If you’ve only got a minute:
- Incorporating insurance savings products into your investment portfolio can provide stability, guaranteed income, and protection against market volatility.
- Annuities offer a reliable lifelong income, mitigating the risk of running out of funds during retirement.
- Endowment plans can help you save for specific life milestones, such as home renovation or weddings, by offering a disciplined savings approach with guaranteed payouts and added insurance coverage.
When it comes to building a financial portfolio, most of us think about equities like stocks and mutual funds for growth, or bonds for a safer option.
But with rising risks and unpredictable returns, how can you ensure that your wealth grows steadily without exposing yourself to unnecessary volatility?
The key is diversification.
By spreading your investments across different asset classes including insurance, you can enhance the risk and return profile of your portfolio. You might not think of insurance as a part of this equation, but it can be an essential tool to help safeguard and grow your wealth.
Insurance: Your lifelong income solution
One of the most pressing concerns for many people -especially as they approach retirement -is whether their savings will last through their lifetime. With increasing life expectancy , the average Singaporean can expect to live to 85, and some of us will live well beyond that. The question is, will your savings be enough?
The unfortunate reality is that even with years of careful planning, some retirees run out of money before they run out of mornings. That's where an insurance product like annuities can step in. By providing a guaranteed lifelong income, annuities can help you mitigate the risk of running out of funds, no matter how long you live.
Unlike traditional investments, which can be subject to market volatility and may deplete, annuities offer you peace of mind with a consistent income stream. It’s similar to our CPF LIFE scheme in Singapore, offering the security of lifelong income. The risk-pooling mechanism of annuities means that you share the longevity risk with others, ensuring that the income continues for as long as you need it.
Learn more: Manulife IncomeGen (II)
Insurance for Stability and Growth
When markets are volatile, the need for stable and predictable income becomes even more important. Insurance products like endowment and retirement income plans provide just that. By offering guaranteed payouts, these products help mitigate the risk of running out of money during retirement, providing a stable financial cushion when other assets might be fluctuating.
Participating life insurance policies come with a cash value component. This cash value isn't solely tied to market performance, which provides an extra layer of stability. You can think of these policies as a buffer against market downturns, offering growth potential with less volatility.
These products act as a stable anchor within your portfolio, allowing for liquidity while providing a cushion in times of uncertainty. Integrating them into your portfolio can enhance its overall resilience, balancing both guaranteed income and growth potential.
Learn more: RetireSavvy
Insurance for life’s milestones
Insurance isn’t just for long-term stability—it can also be a useful tool for achieving your short-term financial goals. Whether it’s funding a wedding, saving for your child’s education, or even completing home renovations, short-term endowment plans can help you build the funds you need within a defined timeframe.
If you are planning for a wedding in 5 years, a short-term endowment plan allows you to save regularly with the assurance of a guaranteed payout when the time comes, so you don’t have to scramble for funds at the last-minute.
Learn more: SavvyEndowment
Or, if you're a parent aiming to secure funds for your child’s tertiary education, an endowment plan ensures you’re financially prepared for tuition fees, without worrying about the rising cost of education.
In addition to helping you save for life’s milestones, these plans typically offer insurance coverage, so your loved ones are protected when something unexpected happens such as premature death and permanent disability. It’s a smart way to combine discipline in saving with the peace of mind that comes from knowing you have adequate coverage.
Learn more: Endowment plans
In Summary
As you plan for the future, whether it's securing a stable retirement income, saving for life events, or building wealth over time, consider incorporating suitable insurance products into your investment strategy.
Not only can they provide guaranteed income and stable growth, but they also offer protection against risks that could derail your financial plans.
By taking a diversified approach and integrating insurance, you can better safeguard your wealth and meet both your short-term and long-term financial goals.
