Earn up to $32,000 more, compared to similar plans in the market
1. Purpose
This plan is for a young person to save for future needs. The attractive features are:
- 100% of savings invested (except for advisory fee of 15% of premium for first 3 years)
- savings is invested in a large, well diversified fund, to earn an attractive return
- the charges are among the lowest in the market
- sum assured of 5 years of savings, or value of investments (if higher)
2. What is the expected return?
The savings can be invested in one of several funds operated by NTUC Income.
For example, a popular fund is the Combined Growth Fund. It comprises of $3,800 million of investments, is invested in 900 quality investments, and is managed by 9 top fund managers globally. The benchmark return of the fund during the past ten years is 6.5% per annum. The actual return during the first 3 years (2003 to 2005) was an average of 16% per annum.
Note:
- The future return is not guaranteed
- Past performance is not indicative of future return.
3. How much must I save?
You have to save a minimum of $100 a month. You can save more, if you wish.
The savings is used to buy units of the investment fund at its prevailing price. The value of the units are expected to increase with the underlying value of the investments in the fund.
4. How much can I expect to get at the maturity date?
If you save $200 a month, the projected amount (not guaranteed) at the end of 30 years is:
Assumed net return 5% p.a 7% p.a. 9% p.a.
Total savings $72,000 $72,000 $72,000
Gain (estimated) $77,900 $141,800 $237,700
Projected amount $149,900 $213,800 $309,700
Assumed net return - after deducting management fee: for illustration only
Gain (estimated) - after deducting spread, policy fee and advisory fee
The projected amount is much higher than the return from traditional endowment or educational plans offered by life insurance companies.
If the policyholder (male at 30) pay a traditional endowment policy for the same premium, the guaranteed sum assured is $xxx,000 and the projected amount at maturity (not guaratneed) is $xxx,000.
5. Is there any life insurance cover?
In the event of death of the parent before age 60, the policy pays a sum assured of 5 years of savings or the value of the investments, whichever is higher. This cover is provided free of charge.
If you need additional cover, we recommend a decreasing term insurance rider. If you insure for $72,000 decreasing over 30 years, the monthly premium is only $xx at entry age 30 and $xx at 35.
6. Can I change my savings?
You have the following options:
- to increase or reduce your regular savings
- to stop your savings temporarily
- to top up your savings
7. Can I make withdrawal for emergency?
You can withdraw any amount from this plan, subject to a minimum of $500. There is no charge or penalty for the withdrawal. When you make a withdrawal, a certain number of units will be cancelled to provide this amount.
8. Is there a minimum saving period?
There is no minimum saving period. You can continue the savings plan for as long as you wish.
However, if you terminate the plan during the first 3 years, the remaing installment of the advisory fee will be deducted from the cash value.
9. What are the charges?
The charges are among the lowest in the market:
- 3.5% spread between offer and bid price
- fund management fee of about 1% on value of investment
- annual fee of $50 per policy
- advisory fee of 15% of premium for first 3 years
These modest charges are more than offset by the higher return that is likely to be earned by the investment f und.
They are much lower than similar plans available in the market. You can get a much better return from this plan.
10. Do all investment funds charge similar annual fee?
Most funds in the market charge an annual fee of 1.5% or 2% of the value of the investment. The combined fund from NTUC Income charge a lower fee of about 1% per annum.
A difference of 1% in annual fee, on a monthly savings of $200, amounts to $32,000 at the end of 30 years (assuming an average return of 6% per annum). You can get $32,000 more, by investing in the combined fund.
11. Do all investment linked plans have similar upfront fee?
Most investment linked plans in the market have a upfront fee of about 19 months of premium. The ideal plan from NTUC Income have have a lower fee of about 7 months of premium (represented by the advisory fee and other charges).
The difference of 12 months, on a monthly saving of $200, amount to $14,000 at the end of 30 years (assuming an average return of 6% per annum). You can get $14,000 more, by investing through our ideal plan.
12. Interested?
Call 6788 1111
Visit our Business Center at Bras Basah Road or Tampines Point.
Or see your insurance adviser.
End of FAQ
6 comments:
In your FAQ No. 10 on "Annual Fee", are you referring to the Fund Management Fee or Annual Fee Per Policy as defined in FAQ No. 9?
It's confusing for readers if you keep using different terminology!
Comments on your FAQ No.10:
1% on a monthly saving of $200 equals to $2. As such, $24 a year and $720 for 30 years.
Assuming I invest the full amount of $720 right from year 1 and stay invested for the next 30 years (at your assumed return of 6% per annum), I would get back $4,135.
How did you manage $32,000??????
Using the charges provided by Kim Lian, if a person was to invest $100 a month or $1,200 a year (the minimum required), his cost of investment would be: 10.55% (Pls refer to calculation below). This DOES NOT take into account the agent's commission of 15% for the first 3 years!!!!!
Even if the fund was performing well at 16% per annum (as Kim Lian had quoted from 2003 to 2005), you will still be losing money.
NOTE: 10.55% is calculated based on:
Spread Between Offer and Bid Px: 3.5%
Fund Management Fee: 1%
Annual Fee: 4.17% (ie $50 of $1,200)
Opportunity Cost: 1.88% (the interest you earn if you put in a bank that you are forgoing)
Think twice before you jump into any form of investment.
I know that Kim Lian had a disclaimer stating that he writes in his personal capacity.
However, from his posts we can all be our own judge.
Justin Lim looks like an agent working for my competitor.
His calculations are wrong and misleading.
Anyway, I will leave his comments for the public to decide.
Kim Lian, you may wish to enlighten us on the "correct" way of calculation.
I am just using locgical calculation.
If indeed I am a competitor, I would be adding sand to my own rice bowl...!!!!!!
Why invest in a platform without 100% allocation into the funds (excluding sales charge and FM Fees).
Why pay 15%-50% first 3 years for the agency. This is so wrong, so many platforms out there dont even have such format.
Beware and do your due diligence before investing.
Regret staying vested for 11years. I will never invest in insurance "investments" anymore. I was so naive...
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