Savings and insurance terms, in plain English
What the words in a Singapore benefit illustration actually mean. The same definitions pop up on the guides, product pages and comparisons when you tap a dotted term. Educational only, not financial advice.
B
Benefit illustration
The document an insurer gives you for a plan with projected values. It shows what the policy could be worth in each year, split into the guaranteed part and the non-guaranteed part, at assumed rates.
It is the document to read closely before you sign: the guaranteed column is what you can rely on, and the rest is a projection.
Related: How to read a benefit illustration · Analyse yours
Break-even year
The first year in which the surrender value is at least the total premiums paid so far. Before that year, ending the policy loses money.
C
Capital guaranteed
Your original money is guaranteed back as the policy or product states, usually if you hold it to maturity. It is not the same as being guaranteed a return.
Related: Capital guaranteed savings plans
Charges (expense ratio)
The yearly cost of holding a fund or policy, as a percentage of its value. It comes out every year, so it compounds. The ILP calculator shows what it costs over time.
Related: ILP vs SSB calculator
CPF Ordinary and Special Accounts
Central Provident Fund savings accounts. They earn a statutory floor interest rate (currently 2.5% a year on the Ordinary Account and 4.0% on the Special, MediSave and Retirement Accounts), but the money is for specific purposes and has withdrawal rules.
Related: CPF rates explained · CPF SA vs SSB
E
Endowment plan
A savings plan that pays a lump sum at the end of a fixed term, or earlier on death. It usually has a guaranteed part and sometimes a non-guaranteed bonus on top.
Related: Endowment vs Singapore Savings Bonds
F
Fixed deposit
A bank deposit held for a set term at a stated rate. Withdrawing early usually forfeits some or all of the interest.
Related: Fixed deposits explained
G
Guaranteed value
The amount the insurer is contractually bound to pay, whatever happens to its investments. It is the only part of an illustration you can rely on.
Related: What "guaranteed" really means
I
Illustrated rate
The assumed yearly investment return an insurer uses to project the non-guaranteed amounts in an illustration. It is an assumption about the fund, not the yearly return on what you pay.
For new Singapore-dollar participating policies, the two illustrated rates have been capped at 4.25% and 3.00% a year since 1 July 2021.
Investment-linked policy (ILP)
A policy where your premiums buy units in investment sub-funds, so its value follows the funds' prices. It has no guaranteed return, and you pay fund and policy charges.
Related: ILPs explained · Is an ILP risky?
M
Maturity value
The amount payable when the policy reaches the end of its term.
N
Non-guaranteed (illustrated) value
An amount that depends on future bonuses or investment performance. The illustration shows it at assumed rates, but it can turn out lower or higher.
P
Paid-up option
An option, if your policy offers it, to stop paying premiums and keep a smaller benefit instead of surrendering.
Related: Surrender value calculator
Participating (par) fund policy
A policy that shares in the profits of the insurer's participating fund through bonuses. The bonuses are not guaranteed, and part of the policy's value usually depends on them.
Related: Participating (par) fund policies
S
SDIC
The Singapore Deposit Insurance Corporation. It insures eligible bank deposits up to S$100,000 per depositor per bank.
SGS bond
Singapore Government Securities: longer-term government bonds. The capital is guaranteed only if you hold the bond to maturity; its price moves before then.
Related: T-bills and SGS explained
Singapore Savings Bond (SSB)
A government bond for individuals. The principal is guaranteed by the Government, the interest steps up the longer you hold it, and you can redeem it in any month without penalty.
Related: Singapore Savings Bonds explained
Sub-fund
One of the investment funds you can choose inside an ILP. Its price, not the insurer's promise, drives your value.
Surrender value
The amount the insurer pays if you end the policy early. In the early years it is usually less than the premiums you have paid, which is why surrendering early often locks in a loss.
Related: Surrender value calculator
T
T-bill
A short-term Singapore government bill sold at auction at a discount. The yield is set at each auction, so it changes from one auction to the next.
Related: T-bills and SGS explained
Y
Yearly return (IRR)
The single yearly rate that, applied to every premium from the day you pay it, would grow to the payout at the end. It lets you compare plans that take money in at different times. The analyser works it out from your document.
Related: How it is calculated