Dear Mr Tan,
I brought a 25 years anticipated endowment plan from P in Year 2003. This plan with monthly premium of S$137.67 allows annual cashback of S$1,000 (from 2nd year onwards).
The guaranteed surrender value start from S$1,000 on the 2nd year and increased up to S$1,413 on the 15th year, and then decreased to S$1,000 on the 25th matured year.
The Non-guaranteed surrender value start from S$110 on the 3rd year and increased up to S$24,811 on the 25th matured year (based on 2.78% projected investment yield to maturity).
I have done a quick calculation as follows:
Annual Premium = $1,652.04
Total Premium paid for 25 years = S$41,301
Total Cashback received (from 2nd years onwards) = S$24,000
Guaranteed maturity benefit = S$1,000 (5% of sum assured)
Total guaranteed benefit with total cashback received = S$25,000
Total Non-guaranteed maturity benefit: S$24,811 (based on 2.78% projected investment yield to maturity)
After 25 years, if the 2.78% projected investment yield to maturity is met, I will only received a total of S$8,510 after deducted the total premium paid, or even lower if the actual investment yield decreases.
After coming to 5 years of enforcing this plan, I have realised that I may have make a wrong choice to buy this policy as the returns seems rather low. I would like to seek your advice on the followings:
1) Do you think I should continue with this plan till 25 years?
2) What plans are there with better guaranteed returns?
TY
REPLY
I find it difficult to analyse this complicated product. The maturity benefit is uncertain, as a large part is not guaranteed. I also do not know what is the loss that you have to face, if you decide to terminate the policy now.
If you decide to terminate the policy, you can buy a decreasing term insurance policy for the insurance protection and invest the difference in a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
At least you realised that you have been taken for a ride but many out there are still sleeping.
ReplyDeleteIt seems this type of products are selling like hot cakes that NTUC joined the fray last year and stole a slice of the market share with their revosave.Revosave is even more cleverly designed to confuse and to beguile the consumers and by incentivising the greedy agents with high commission in this collaboration.
MAS should look into this becuase this type of products are dubious and have no real benefits for the buyers except some fanciful and ambiguous, abstract, meaningless
"don't know what" to confuse and to distract the buyers.
If MAS is serious about eliminating unethical practice it must proactively step into the market place and police it.
Dear Zhu,
ReplyDeleteApart from MAS's assistance we must find an effective way is to inform the public without getting into any legal tango to totally avoid any form of participating and investment products from any insurance companies.
Hi zhummmeng, r u one of the staff remove by the new mgmt, cos most of ur comment gave me this impression.
ReplyDeleteHowever, i do agree this type of yearly cashback plan (which many insurance companies offer) is a lousy saving plan.