A payout fixed today, collected in 5 years: what is it worth?
A sum assured, a fixed annuity or a guaranteed maturity value fixes a number, not a value. Here is what 2021-07 → 2026-06 of money supply and consumer prices did to a S$500,000 payout in Singapore, and what each benchmark cannot tell you.
What does a fixed future payout actually promise?
It promises a number, not a value. A contract that pays S$500,000 at some future date fixes those digits on the day you sign. What the digits will buy, or what share of the money stock they will represent, is decided over the years that follow. There are two standard benchmarks and they do not agree: a consumer price index compares the price of a defined basket, while a money-supply ratio compares the size of a monetary aggregate. Neither is a complete description of a household.
What happened in Singapore over this window?
Over 2021-07 → 2026-06, Singapore-dollar M2 rose 1.26 times. Over 2021-04 → 2026-04, the headline consumer price index rose 1.17 times. Applying each ratio to a S$500,000 payout collected at the end of the window gives two different answers about the same money.
Value of a S$500,000 payout in start-of-window terms. Consumer prices: S$425,600. Money stock: S$398,000.
What happened in Singapore over this window?
Share retained
Shared linear scale from zero. Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Benchmark | Change over the window | Payout in start-of-window terms | Share retained |
|---|---|---|---|
| Consumer prices | ×1.17 | S$425,600 | 85.1% |
| Money stock (Singapore-dollar M2) | ×1.26 | S$398,000 | 79.6% |
Neither row is the correct one. If the payout is meant to cover living costs and medical bills, the consumer-price row is the closer reference. If it is meant to hold its position against asset prices and the size of the money stock, the money-supply row is closer. Read the question first, then pick the row.
Who holds the money in the meantime?
In any long-dated fixed-sum contract the two sides hold different things. One side receives small amounts over decades and holds them as invested assets; the other side holds a claim whose digits were fixed at the start. That asymmetry is structural, and it is priced into what you pay: a lower assumed investment return means a higher premium for the same sum assured, and a higher one means a lower premium. It applies to insurance benefits, fixed annuities, guaranteed maturity values and any savings target expressed as a fixed nominal number.
Products that raise the sum assured over time exist. They cost more, because the currency risk moves from one side of the contract to the other rather than disappearing. That trade-off is the thing worth checking before signing, and it is a different question from whether the cover itself is worth buying.
Five years is too short to read as a long-run pattern, so treat the Singapore figures as an illustration of the method rather than as evidence about long-dated contracts. The longer CPI series does reach back twenty years: 2006-04 to 2026-04 gives 1.53 times.
What this comparison does not tell you
It does not tell you that protection is a bad purchase. A protection contract moves money in time rather than compounding it: if the insured event happens next month, the fixed sum arrives undiscounted, and no savings plan produces that. The figures above describe only one case, the payout collected far in the future.
It also does not transfer to another window. Ratios depend on the months chosen, on the definition of each series and on what is actually published for this market. Use the same months on both sides, keep each series on its own definition, and do not treat a missing observation as zero.
This is a five-year window, and the two series do not share the same end month. Singapore-dollar M2 on the current definition begins 2021-07, after the removal of the DBU/ACU divide, and no earlier series is spliced on; the CPI here ends 2026-04. A twenty-year M2 comparison is not available from this data.
Questions & answers
Does this mean insurance is a bad deal?
It is not a return comparison. A protection contract moves money in time: if the insured event happens shortly after you sign, the fixed sum arrives undiscounted. The figures here describe only the value of a sum collected far in the future.
Should I use consumer prices or money supply?
They answer different questions. Consumer prices are the closer reference for living costs and medical bills. A money-supply ratio is closer if the amount is meant to hold its share against asset prices. Neither describes an individual household exactly.
Can I apply these ratios to my own contract?
Only as an order of magnitude, and only for the window shown. The result depends on the start and end months, the series definition and the data published for this market. Put your own amount and dates into the calculator and read the source notes.