NTUC Income Endowment Plan – SAIL

If you have the cash and find that bank’s interest rate pays pittance and investments in most asset classes are fraught with risks, what can you do to park your money to obtain a decent return?

I have decided on SAIL, a single premium endowment plan offered by NTUC Income. It suits my needs for retirement planning. It allows me to save for retirement during the accumulation period and enjoy annual payouts after the accumulation period till age 85 years old or death whichever comes first. It is both an investment and protection plan covering death and total & permanent disability (TPD). The investment portion is to grow your money at a decent rate of return. The rate of return covers both guaranteed portion and non-guaranteed portion which are determined by NTUC Income’s Life Participating Fund’s performance.

Based on an illustration provided by NTUC Income: Mr Lee, age 55, who is in his mid-life phase decides to supplement his retirement income. He signs up for single premium SAIL plan with a single premium of $50,000 and an accumulation period of 10 years. At the end of 10 years, $50,000 becomes $58,601 guaranteed. This is 1.60 per cent return per year guaranteed. If the non-guaranteed portion is included, $50,000 becomes $74,729. This is a return of 4.10 per cent per year.

After the accumulation period, this policy is then converted to an annuity and the annual payout can potentially be $6,092 per year (inclusive of guaranteed and non-guaranteed portions) for the next 20 years. To re-cap, you place $50,000 now and in 10 years’ time, the annual payout is $6,092 per year for next 20 years. This works out to an internal rate of return of 4.61 per cent per year.

The return is decent. At a minimum, you are guaranteed a minimum return of 1.60 per cent per year. If the non-guaranteed portion is included, potentially the return can be as high as 4.61 per cent per year.

Copyright © 2011, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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6 Responses to NTUC Income Endowment Plan – SAIL

  1. Helen says:

    This was really a fascinating subject, I am very lucky to have the ability to come to your weblog and I will bookmark this page in order that I might come back one other time.

  2. David says:

    What will pay the payout if just based on guaranteed portions?

    • limkimtong says:

      I asked an insurance advisor on your question: “Working out using the Discounted Cash flow model for the complete term of
      30 years (10 years accumulation and 20 years annuity payout) based on initial capital of $16,000, the Internal Rate of Return for (i) guaranteed payout is 1.32% and (ii) including non-guaranteed payout is 4.87%.”

  3. june says:

    Dear Mr Lim
    I read your article on SAIL and thought that investment was suitable for me.
    However, I went to NTUC Insurance website and found that it was discontinued:(.
    Do you know of another similar single premium policy in the market?
    Thank you very much and I would also like to thank you for making complex investment simple for me:)

    • limkimtong says:

      I had seen NTUC Income webpages. I thought SAIL is still in existence. Please ask NTUC Income for details.

      • june says:

        Thank you very much Mr Lim! I really appreciate your reply and I shall check out with NTUC again about SAIL.
        May I thank you for your articles again for helping me straighten my thoughts regarding retirement plans, the greed and the need differentiation. There is just too much information load out there from too many parties with too many opinions of investments with the best returns rather than on investments that is suitable for one’s needs. Thank you!

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