Tan Kin Lian's Blog: Does the Growth policy still give good value?

Sunday, May 04, 2008

Does the Growth policy still give good value?

Dear Mr. Tan,
I was always told that NTUC Income was the only one can give the policyholder the best and protect our interest and thus, for more than 10 years I have "invested" my hard-earn extra cash or CPF into "one basket", i.e. NTUC INCOME. I now feel uncomfortatble with INCOME when receiving their notice to reduce the annual bonus as below.
(details deleted)

Dear
> You invested $50,000 more than 10 years ago. At that time, the projected maturity benefit was $136,403 representing a yield of 5.7% p.a.
> During the difficult years when investment yields were low, the bonus rate was reduced. The projected amount on maturity was revised to $114,047.
> With the latest round of bonus revision, the projected amount at maturity has increased marginally to $116,467. It represents a yield of 4.8% on your invested sum of $50,000 over 18 years.

I think that this revised yield is quite satisfactory. It give a better return than CPF. The Growth policy still represents a good investment because you took it earlier. I am not sure that a Growth policy today will give the same good value.
Tan Kin Lian

Dear Mr Tan,
Thanks a lot for taking time to give me the advice on my policy. I really appreciate it.

I wrote to INCOME before for advice on my cash value if I cancel some policies and the reply was a typical "stereotype" answer of my cash value. I also went to NTUC Income of Jurong East and Ubi before for advice. The customer service seems not well trained for providing advices and instead asking me whether I am interested in their new policy - Vivolife.

Once again, I would like to thanks for your kindness for taking time to reply me. You place the policyholder first before shareholder's point of view.

(I think you are hurt and upset of handing over to some new management team that does not follow the service commitment of the cooperative insurance society formed in 1970, " Income has always placed the interests of our policyholders foremost" stated in NTUC INCOME website - it will no longer valid after you leave the organisation.......)

3 comments:

Anonymous said...: Did you know the advantages NTUC INCOME has over the other insurance companies?
#1. Every policyholder is a shareholder. Whatever profit after expenses will be distributed to policyholders. The expenses used to be 2%. I wonder if it is still 2$. If it has gone up, let's say 10% there is something very wrong. It means over spending. Maybe
the senior management is over paid, marketing cost is high and unnecessary spending like posh hotel meeting for agents, oversea incentive trips, cocktail parties and other splurgings.
#2. Cooperatives don't pay tax, that is 20% ahead of other companies.Ntuc has 20% to spare and to R&D the best products. Why need to cut annual bonus? Why need to smoothen? That is always surplus if managed efficiently.
#3.Unlike other companies there are shareholders and only 10% of profit distributed to them first and the rest to policyholders. But NTUC has no private shareholders and policyholders are share holders. This is another reason why policyholder get good return on their policies in the past.Why cut annual bonus? If annual bonus is cut and smoothing is the reason then something terribly wrong.
It is very difficult to understand
why cut is necessary when NTUC has competitive advantages. In fact NTUC can produce products with low premium, high return and coverage without any problem instead of those dumb products like revosave and vivolife which are expensive and have none of the features. Instead rubbish frills are used to cover up the flaws and weaknesses.
I wonder any cover up else where.; May 04, 2008 4:01 PM
Anonymous said...: Growth will NOT return 4.00% as projected in the next 10 years. At best it is between 3-3.5% considering
the low interest rate.; May 04, 2008 7:26 PM
Anonymous said...: Be careful when you buy growth. Check the guaranteed cash value. This may have changed because of annual bonus cut.Don't buy with 2 eyes closed. And don't trust your agent completely.
Any way , it is not a good product. The return will fall short of the projection. The terminal bonus is very questionable.; May 07, 2008 7:22 PM