How to compare an endowment's return with T-bills, SSB and fixed deposits on a like-for-like basis

Comparing an endowment with T-bills, Singapore Savings Bonds (SSB) or fixed deposits on a like-for-like basis means turning every option into an annualised rate over the same holding period. You compare the guaranteed part of the endowment with the guaranteed rates of the alternatives, and then account for liquidity, tax and protection separately. An illustrated maturity value is not a yield, and a 6-month T-bill rate is not a 10-year rate. Most misleading comparisons come from mixing the two.

Three common mistakes

MoneySense has cautioned that endowments are sometimes sold as if they were deposits (quoted on the compare page). These three errors make that confusion worse:

1. Comparing the illustration rate with a deposit rate. The 4.25% and 3.00% rates in a Singapore-dollar participating illustration are the investment rates of return LIA allows insurers to assume for the participating fund. LIA states they "are used purely for illustrative purposes and do not represent upper and lower limits" on returns. They are not the policy's return. Deductions for distribution, expenses, insurance cost and shareholder transfers come off first.
2. Comparing a total with a guaranteed figure. An illustrated maturity value includes non-guaranteed bonuses. A fixed-deposit or SSB rate is contractual. Only the endowment's guaranteed column is the same kind of number.
3. Comparing different horizons. A 6-month T-bill yield says nothing about what you will earn when you roll it over for ten years. An endowment's value in year 3 can be far below its value at maturity.

Step 1: match the horizon and the cash flows

Start from the endowment's policy term and premium pattern, and build each alternative over the same period:

• Single premium: one outflow today and one maturity inflow at the end of the term. Compare it with a lump sum placed in SSB or rolled in T-bills or fixed deposits for the same term.
• Regular premium: annual outflows over the premium term, then one inflow at maturity. Compare it with depositing the same amounts on the same dates.
• Anticipated endowments and annuities: include every interim payout on its date.

If you might need the money before maturity, add a second horizon, such as year 5, and run the same comparison using surrender values. The section on surrender values and break-even years explains where to find them.

Step 2: compute an IRR on guaranteed and on illustrated values

The internal rate of return (IRR) is the annual rate that makes the present value of what you pay equal to the present value of what you receive. For a single premium, IRR = (maturity value ÷ premium)^(1 ÷ years) − 1. For regular premiums, use a spreadsheet IRR function on the dated cash flows.

Hypothetical example, for illustration only (not based on any product): a 10-year single-premium SGD endowment with a premium of S$100,000.

Two points follow. First, only the 1.14% is certain under the contract, so it is the figure to set against the rates of T-bills, SSB and fixed deposits. Second, the illustrated IRRs (2.01% and 3.05%) sit below the illustration rates (3.00% and 4.25%). That gap reflects the policy's costs, which LIA's illustration format reports as "Effect of Deductions" and "Total Distribution Cost". A regular-premium example works the same way. Hypothetical premiums of S$10,000 a year for five years, followed by a guaranteed S$54,000 at the end of year 10, give an IRR of about 0.97%.

Step 3: price reinvestment for T-bills, SSB and fixed deposits

Current figures for each benchmark are kept in one dated table on the compare page, reviewed monthly. What matters here is how much of each rate is fixed over a 10-year horizon:

SSB is the closest guaranteed benchmark for a 10-year endowment. Its 10-year average return is fixed at application and paid by the Singapore Government; MAS's November 2026 issue, for example, shows 2.45% a year if held for 10 years (MAS, 1 Oct 2026). T-bills and fixed deposits carry reinvestment risk: today's yield applies to one tenor, and future rollover rates are unknown and could be higher or lower. A fair comparison either tests a range of rollover rates or uses the SSB schedule available at the time as the 10-year anchor. In the hypothetical example, the guaranteed IRR of 1.14% would sit below that 2.45% average. The illustrated IRRs depend on bonuses that are not guaranteed.

Step 4: liquidity and the cost of exiting early

A like-for-like table must show what each option returns if you exit early:

• SSB: "redeemable in any given month, with no penalty for exiting the investment early" (MAS). You receive your principal plus accrued interest.
• T-bills: held to maturity at six months or one year. Selling before maturity depends on the secondary market.
• Fixed deposits: early withdrawal usually forfeits some or all interest, depending on bank terms.
• Endowments: MoneySense notes that "early termination may result in losses". The LIA participating guide warns you "may lose all or nearly all of the total premiums paid" if you surrender in the early years.

For a regular-premium plan, check the year in which the guaranteed surrender value first reaches total premiums paid, and set your liquidity reserve aside before you commit.

Step 5: tax and protection

For most Singapore-resident individuals, interest on these alternatives is not taxed, so the comparison is usually made before tax. Confirm the endowment's position with IRAS, and if you are taxed abroad, check your home-country rules, which can change the result.

A like-for-like template

Copy this table and fill it in for your own quotes:

An endowment can still suit someone who values a fixed maturity date, enforced saving or an insurance element. The aim is to see what that costs in yield and liquidity, not to prove one product better. See the compare page for a side-by-side view of features, or How to read a benefit illustration to find each figure. If you would like a second pair of eyes on the IRR of a quote you hold, you can register your needs through the contact options on this site.