Save for Your Child’s Education with An Endowment Insurance Plan

Endowment insurance is a great method of saving for future education costs, but it can be a challenge to make the right decision about which plan is the best for you. Let’s explore how endowments insurance plans can help you save for your children’s future.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Feb 19, 2024

girl wearing graduation cap


A common woe for parents is funding their children’s future. One way to tackle this concern is using the various endowment insurance options in Singapore properly.

It’s expensive to raise a child here, and the financial future of your child’s education is a concern for every parent. Thankfully, endowment funds can help alleviate this worry. Though endowment plans can be used to plan ahead for any life events, in this article, we will discuss some of the factors you should consider when using it to save for your children’s future education needs as well as some insurance savings plan options.

Related: Ways to Start Investing For Your Children to Give Them a Financial Head-Start

Endowment Plans Help You To Start Saving Early

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Source: Unsplash

Perhaps the most important aspect of saving for your child’s education is getting started early. Higher education, such as a university degree, can be substantially more expensive than Primary and Secondary School. Saving a large sum for this expenditure will be made substantially easier by starting to save early.

It’s never the right move to delay saving. Most people find it much more manageable to pay small premiums towards an endowment plan over a longer period rather than having to suddenly cough up larger sums quickly later on. The later you start saving, the quicker you’ll have to save up when you do, and the higher your monthly premiums are likely to be.

Related: How to Find the Best Endowment Insurance Plan

Source: Unsplash

Consider Your Endowment Plan’s Payout Flexibility

What Is The Payout Schedule?

It’s worth considering when you’ll need to receive your payouts. Some plans provide a lump sum at policy maturity, whilst others would have multiple payout terms that can be scheduled to drop during the University years of your child.

You should also consider the frequency of payouts as well as when you will receive the first and last payout. Having the flexibility of accessing some of the payout before or after university may help you to foot the bill for some of the associated costs, such as all the fees associated with university applications or even accommodation costs after graduation.

Related: How Much Does It Cost to Send Your Children to a University Abroad?

What Are The Cash Benefits?

Some plans may include annual cash benefit withdrawals after a specified number of years. This additional payout can either be withdrawn or reinvested into the endowment plan. You may consider reinvesting this payout back into the endowment plan to grow your returns if you only intend to expend that payout toward a particular life event when the policy matures.

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Source: Unsplash

Plan your costs

Where And What Do You Expect Your Child To Study?

The projected costs of a higher education in Singapore can vary widely depending on where you’d like your child to study. Local public universities often are more affordable to study at compared to private universities or overseas studies.

Estimated Cost of Education in Singapore (Citizens)

Levels of EducationEstimated Costs To Complete The Course
Primary SchoolS$156
Secondary SchoolS$300 -S$600
Junior College (JC)S$300 – S$600
Institute of Technical Education (ITE)S$410 – S$3,310
University Undergraduate DegreeS$33,000 – S$120,800

How expensive your child’s tertiary education costs are is highly dependent on if your child attends a local or overseas university.

For example, whilst it costs S$8,250 – S$14,700 for a Singaporean citizen to study a non-medicine, non-dentistry course at the National University of Singapore in 2023, the costs of tuition fees for a UK undergraduate program ranges from S$17,000 to S$44,000. Furthermore, studying overseas brings with it additional costs such as flights, accommodation, and other living expenses.

Another contributor to university tuition fees is what field of study your child enters. Whilst it costs just S$ 8,250 a year to study arts & social sciences in the National University of Singapore (NUS), it costs almost four times more at S$ 30,200 a year to study medicine at the same university.

National University of Singapore (NUS) Tuition Fees 2023/24 (Per Year)

ProgrammeSubsidised – SG CitizenSubsidised – SGPRSubsidised – InternationalNon-Subsidised
Humanities and Sciences8,25011,55017,96534,890

Source: National University of Singapore

When do you Expect your Child to Start University?

cost of education in Singapore CPI
Source: SmartWealth

Generally, the cost of an undergraduate course is expected to double in the next 20 years. Education costs, particularly those of higher education institutions have been rising steadily, with education costs 86.8% higher in 2022 than they were in 2001. That means, that in theory, an undergraduate course that used to cost S$50 000 in 2000 cost more than S$93,000 by 2022. From 2000 to 2022, the only year that prices have decreased is in 2020. It is critical to know when you expect your child to be entering university and estimate the cost for their education well in advance.

Types of Endowment Insurance

There are two types of endowment insurances that can be useful for saving for your child’s future: traditional endowment plans and education savings plans.

Traditional Endowment Plans

Traditional endowment plans are the most common endowment plans. They follow a simple model you pay premiums according to the payment option selected, and once the policy matures, you receive a payout. One advantage of this type of endowment is that you may already have a traditional endowment plan, and those funds can be reallocated to be used for your child’s future education.

Some traditional endowment plans can act a s an additional source of funds by allowing you to withdraw cash benefits from your policy at certain terms before your plan matures . Note that, however, such a withdrawal will reduce your maturity payout. Therefore, if you are planning to save up for a large expenditure once the plan has matured, it is probably best to utilise the option to reinvest the cash benefits back into the endowment plan.

Related: Best Endowment Insurance Plans Singapore 2024

Educational Savings Plans

The primary attraction towards educational savings plans are their namesake specificity, education savings. This makes them an ideal option for parents looking to save for their child’s future education.

Often when looking for an education savings plan, parents will be able to find an assortment of different payout options.  The payouts are typically spaced out, with some before the plan matures and some after it matures.

An additional benefit of this type of such a plan is that the accompanying insurance will cover your child, though it will be up to you to compare life insurances against endowment insurances to find a combination that provides your child with the coverage you are looking for.

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Source: Unsplash

Other Endowment Plan Features

Payment Options

Payment options vary across the different endowment plans. Payments are most often made either as regular, limited, or single premiums.

The regular pay option is most easily understood, and simply requires regular premium to be paid throughout the plan to maturity. These plans often enjoy a lower premium per payment.

Limited pay options are similar to regular payments in that you will be required to pay a series of premiums over a period. However, the difference is that this payment period will be shorter than the duration of the plan.

Last but not least is the single premium option, where you will pay a large sum once. This payment option, though available for both long and short term plans, can have long term savings implications if it requires you to empty out your savings nest to purchase the endowment plan.

Participating vs Non-Participating

A common point of concern with endowment plans are the risks associated with the plans. One contributing factor to this risk is whether your chosen plan is a participating or non-participating plan.

Participating Plan

A participating plan refers to the participation of some of the premium you pay in your insurer’s investment fund. Your payout is therefore split into 2 categories, guaranteed and a non-guaranteed bonus.

The guaranteed portion of your payout is just that, guaranteed, you will receive that sum at your plan’s maturity. However, the non-guaranteed bonus is determined by a combination of the participating fund’s performance and expenses, as well as claims made on the fund.

A common practice for insurers to avoid large fluctuations in bonuses declared is to smooth the bonuses over time. The smoothing of bonuses refers to the holding back of bonuses when the performance of the fund is good, so that bonuses can be maintained in less favourable times. The result is more stable bonuses that may not reflect the volatility of the investment market. Often bonuses are declared annually after the first 2 years of the policy, and this bonus is guaranteed after the declaration.

Non-Participating Plan

A non-participating plan simply is one where all returns are guaranteed, and will be received when the policy is held till maturity, though you will not benefit from any bonuses regardless of your insurer’s fund performance. Naturally, participating plans can result in greater payouts but come with a higher risk than non-participating plans.

Related: VC Compares: Endowment Plans vs ILPs — Which Should You Get?


The financial strength of your insurer should also be a significant concern for anyone considering an endowment plan. Though different sources may differ on the exact credit rating for different insurers, they are still a good way to establish a benchmark credit rating that you can trust with your investment. Several credit agencies that you could reference for these credit ratings are Standard & Poor, Fitch and Moody.


The needs and requirements for every parent varies greatly. Whilst education savings plans are the obvious choice, particularly if you’re looking to start a new plan to save for your child’s education, traditional and retirement plans can also have a place in contributing to financing the cost of education, whether directly, or by helping manage your finances and simplifying the decision making process.

Now that you know what you are looking for, check out our round up of the different endowment plans in Singapore  to get started on your savings goals today.


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