Tan Kin Lian's Blog: New products from NTUC Income

Friday, September 14, 2007

New products from NTUC Income

COMMENT POSTED IN MY BLOG

The extravagant splurging on ads and rebranding is going to make REVoSAVE the most expensive product ever launched.

PAYMYuni has already gone south. Going by the reception by the public it looks it was doomed from its birth. Why? It is a redressed up product with no real benefit. It's a wolf in sheep's clothings. (High commission)

An agent was promoting to me of the flexible options revosave has. I told her, money in my hand is far more flexible. I have more options.

For liquidity I can put into a money market which earns up to 3.5%
If I want to be locked away for many years I can buy a plain vanilla endowment for higher return and higher insurance coverage.

For even higher return I can invest into a RSP which charges 3% but with all my premium invested and not just 36% of my premium as in what I would have paid for revosave.

You see, I can have more to spend on my sunny days and also plenty to meet my rainy days and not forgetting to mention the insurance coverage which is higher than revosave for same premium. I have real freedom and peace of mind.

Thanks to Doc. Money, without his advice I would have been a prey also.

REPLY

Revosave is similar to (but offer a slightly better return) compared to another product that sells very well in the market.

The popularity of the earlier product may suggest that there are some features that appeal to the consumer. Some people may not be driven entirely by the return on the product.

PayMyUni is an endowment product. It gives insurance protection and a fairly satisfactory rate of return (maybe 3% or higher). It was designed during my tenure as CEO.

However, parents now have another option, i.e to invest in a low cost fund, such as the combined fund, and to buy a decreasing term insurance. Read this FAQ.

3 comments:

Anonymous said...: Even it is true that revosave is slightly better than the other worser product does not make revosave a good product. It is comparing to a bad product to look good. It is a just a play of words and some clever reasoning. I cannot see the goodness of this product. Whichever option you take it is inferior.Option 1:Cash back comes after the 25th month and is only 37% of what you paid. What happens to the other
63%? If I put into a money market i can get every cent plus interest at 3.5%. Revosave gives less than 2%
What liquidity?
Option 2: to leave with Income? again only 37% of my premium is invested at 3.5% What happens to the rest? Once again if I put into a money market I get 3.5% for ALL my premium and not 37% of it.Do you think I get better return than revosave?
Option 3: For insurance protection, if I buy an endowment i get almost double than what I get from revosave and much higher return too(4.4%)
Option 4: If I invest in ILPs with charges like ID2(worst scenario case) I get to invest ALL my premium and not 37% of it. What do u think of the likely return, short term and long term?
Option 5: I have greater freedom; no long lock in, if I DIY instead of revosave.
What is your verdict? You, the customers make the judgement and arrive the verdict.
I rest my case.; September 14, 2007 10:25 PM
Khiat Han Hwee Adrian said...: First to correct Mr Anonymous,

I am not able to conclude this 37% that you mentioned, you may like to check your records or the adviser that approached you.

On separate analysis,
* If 15yrs term is chosen, around 50% is refunded from 25th month
* If 20yrs term is chosen, around 61% is refunded
* If 25 yrs term is chosen, around 68% is refunded

The rest of the non-refunded portion gives around 4.0-4.1%p.a, using a 20 yrs term as an example.

Comparing to similar plan like Prucash, Smartsavers or Moneyback, revosave is still better in term of returns and the availability of the investment option.

Anyone who wish to comment on revosave should comment all Anticipated Endowment Plans as a whole, not on any one plan. Readers may not know that nearly all companies have such policies.; September 16, 2007 12:49 AM
Anonymous said...: You are right to say that i didn't mention other products of similar
characteristics .It is because revosave has been aggressively hyped and up profiled and therefore a need to bring it down to where it rightfully belongs.
I hope in one fell swoop,i would say that all in this class of products are nothing but some "mutton dressed up as lamb". It means it is not what they claim.It is masqueraded .Yes , it is marketing strategy but cannot fool the savvy customers.
As for the figures the 37% I am referring to each time the premium is paid only 37% (except for the last cash back)goes to some investment.Isn't this a fact?
As for the total cash back the return is less than 2%.I am baffled by your set of numbers.
Whatever, revosave should not be recommended and will not be recommended if the financial adviser uses a need based approach because that there is no where that a client has such "multiple" needs. There is no such thing. Only wants, yes. Because wants are always fickle and idiosyncratic. This is NOT meeting needs. Revosave can only pander to the WANTS of customers.It is a lifestyle product.
It has no financial planning value
and financial planning is about planning for clients' needs. If revosave has, it is a poor relative
of other investment products.Why then, revosave when there are many other products that are superior?; September 16, 2007 3:51 PM