Author
Bowtie Team
Updated on
2025-05-27
Disclaimer: This article is translated with the assistance of AI.
What is saving insurance? Is it good or bad? Bowtie’s insurance team compiled answers to 5 popular questions from Threads debunk the myths!
1. What Are The Differences Between Bank Fixed Deposits And Savings Insurance?
Bank fixed deposits have a maximum term of 1 year, while savings insurance comes in two types: long-term and short-term. Short-term Savings Insurance typically has a term ranging from 1 to 5 years and offers guaranteed returns, which is similar to the concept of fixed deposits.
However, even for short-term savings insurance, if you surrender the policy early, the cash value you receive may be much lower than the total premiums paid. Therefore, ensure you have sufficient liquidity before purchasing.
2. Are Returns Guaranteed? Will I End Up With Zero Returns?
The benefit illustration in insurance policy documents usually includes guaranteed and non-guaranteed returns. Non-guaranteed returns are influenced by factors such as investment strategy and performance, claims experience, and operating expenses. Thus, the actual non-guaranteed returns you receive could be higher or lower than the figures in the illustration. In extreme cases, non-guaranteed returns could even be zero.
Therefore, before purchasing, consumers should understand the product’s Dividend Realization Rate , which reflects the insurance company’s past performance in distributing dividends (non-guaranteed benefits). This information can be found on the Insurance Authority’s website list of insurers’ dividend realization rates .
3. Is Savings Insurance a Scam?
Savings insurance is highly controversial online. In all fairness, it has both advantages and disadvantages, and consumers should carefully analyse whether the product suits them.
Disadvantages: The main drawback of savings insurance is its low liquidity, as early surrender can lead to significant losses.
For example, with a 5-year savings insurance plan, the breakeven period may take 7 to 10 years (including non-guaranteed dividends), so not holding it long-term will affect investment returns.
Additionally, the premium payment period generally ranges from 5 to 20 years, and once purchased, the amount cannot be adjusted, making it hard to align with different life stage needs.
Advantages: Savings insurance offers guaranteed returns, and some plans provide regular dividends, adding stability to investments.
For those without investment experience, having professional teams manage the investments is a major plus. Moreover, regular fixed premium payments can help cultivate good saving habits.
4. Are Savings Insurance Commissions The Highest?
According to former MDRT member and YouTuber, ChiWai, the commissions for insurance agents’ savings products are as follows:
| Insurance Product | Contribution Period | First-Year Commission | Renewal Commission |
| Whole Life / Critical Illness
(including savings component) |
10 years | 25-40% | 2-15% |
| 18/20 years | 40-55% | 2-15% | |
| 25 years | 45-60% | 2-20% |
As shown in the table above, the first-year commission and renewal commission vary depending on the length of the contribution period. For example, with a first-year commission of 60%, more than half of the client’s first-year premium might be used as agent commission, with only a portion going toward actual investment or coverage purposes.
As for brokers, commissions could be even higher. F or certain products with long contribution periods, the first-year commission alone could reach as high as 96%, meaning almost all of the first-year premium is used for the broker’s commission .
5. Is Term Life Insurance Better Than Whole Life Savings Insurance?
Term Life Insurance (also known as Pure Life Insurance) has no savings or investment components. Every penny is used for the client’s protection. Purchasing Term Life Insurance could result in premiums that are 75% cheaper.
Table: Total Premium Comparison from Age 30 to 65
Assuming the policyholder is a 30-year-old non-smoking male with a coverage amount of $4 million.
| Total Premiums from Age 30 to 65 | |
| Company A’s Whole Life Savings Insurance* | $1,541,000 |
| Bowtie’s Term Life Insurance * | $385,000 |
*Calculated based on a popular whole life insurance product on the market, assuming the policyholder is a 30-year-old non-smoking male with a contribution period of 25 years. The actual premiums paid are affected by factors such as time, inflation, underwriting, and must include the levy collected by the Insurance Authority.
Of course, if you are a knowledgeable investor, you can ‘Buy Term, Invest The Rest’ and outperform whole life savings insurance.
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