Life Insurance Corporation Singapore (LIC) has recently launched their Wealth Plus 2 product.
This is a single premium 5-year endowment product with an annualized yield of 1.92%.
In simple mathematical terms, a yield of 1.92% will mean an investment of $50k will grow to $55k in 5 years time.
The yield is slightly higher than a similar product Wealth Plus Plan that they launched last year which gave a return of 1.6% p.a. This is not surprising given that interest rates have been going up.
This is a limited tranche product and application will close once $15 million has been received.
So how does this compare to the soon to be launched Singapore Savings Bonds (SSB)?
The current 5-year Singapore government bond is giving a yield of around 1.65% p.a.
So if you were to buy both of them now and hold them to 5 years, the LIC Wealth Plus 2 will offer a slightly higher yield.
However, the SSB has its advantage in that it’s fully guaranteed by the Singapore government and also you can terminate it at any time without any penalty. We also currently do not know what’s the maximum amount of SSB that an individual can buy.
For LIC Wealth Plus 2, if you surrender before year 3, you will suffer a slight capital loss. So this product is only suitable if you do not intend to use the money for the next five years and want to diversify some of your money.