Buy term and invest the difference

Hi Mr Tan,

I write to seek your advice on the likely returns on my endowment policy and to switch out of P to NTUC.

I am 34 years old. I am also now 6 years into a 25 year life/critical illness endowment policy with P (100K as life sum insured).

I read in the papers about low term rates and why it is unwise to mix endowment policy with term.

I enquired from my adviser the rates of a P policy on the same scope as my current endowment policy but without the "endowment" elements.

The rates are $255 versus $50. This difference is significant as this P endowment policy has a guaranteed amount plus a non-guaranteed amount. Despite the projected yield of about 4%, I have no confidence the non-G portion pay-out will be met.

I may be better off switching out of the endowment policy now, but a term for $50 till I am say 55, and investing the difference of $200 into some kind of scheme that earns better returns than the projected yield. Is my thinking correct?

Warm Regards,

UTY

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Dear UTY

I will ask my business center manager to get a consultant to look into your case. We will offer an alternative plan for you.

However, I suspect that as you have aleady incurred the high charges under your P policy, it may not be possible for us to offer a better alternative for you under our similar Living policy

One possibility is for you to swtich to our Ideal plan (ie an investment linked plan) and buy the critial illness separately under a rider. My consultant will give you the figures to see if it is to your advantage.

Tan Kin Lian
CEO, NTUC Income