Which Education plan for new born baby girl?

limster

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Sorry. I got the figures wrong.

Total Premiums paid (over 25years): $20,655

Projected Maturity Benefit
Guaranteed : $ 14,386
Non-Guaranteed : $ 14,871
Total :$ 29,257


Seriously, $20,655 premiums paid over 25 years, and guaranteed is only $14k?

Who buys this kind of policy????
 

Perisher

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i used a regular savings calculator and the annual interest rate should be ard 2.635% if they return me the exact figures in the benefit illustrations.

the problem is having a non-guaranteed amount that makes up 1/2 of the maturity value..

Not sure how you get 2%+

$29k from $20k investment over 25 years...
EIR is about 1.6% correct? (correction to 0.18, forgot to x100)
 

Flex11

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Not sure how you get 2%+

$29k from $20k investment over 25 years...
EIR is about 1.6% correct? (correction to 0.18, forgot to x100)

err.. I used online calculator

Year Deposits Interest Total Deposits Total Interest Balance
1 $826.20 $11.89 $826.20 $11.89 $838.09
2 $826.20 $34.24 $1,652.40 $46.13 $1,698.53
3 $826.20 $57.19 $2,478.60 $103.32 $2,581.92
4 $826.20 $80.75 $3,304.80 $184.07 $3,488.87
5 $826.20 $104.94 $4,131.00 $289.00 $4,420.00
6 $826.20 $129.77 $4,957.20 $418.77 $5,375.97
7 $826.20 $155.27 $5,783.40 $574.04 $6,357.44
8 $826.20 $181.44 $6,609.60 $755.49 $7,365.09
9 $826.20 $208.32 $7,435.80 $963.81 $8,399.61
10 $826.20 $235.91 $8,262.00 $1,199.72 $9,461.72
11 $826.20 $264.24 $9,088.20 $1,463.95 $10,552.15
12 $826.20 $293.32 $9,914.40 $1,757.27 $11,671.67
13 $826.20 $323.18 $10,740.60 $2,080.45 $12,821.05
14 $826.20 $353.83 $11,566.80 $2,434.28 $14,001.08
15 $826.20 $385.30 $12,393.00 $2,819.59 $15,212.59
16 $826.20 $417.62 $13,219.20 $3,237.20 $16,456.40
17 $826.20 $450.79 $14,045.40 $3,687.99 $17,733.39
18 $826.20 $484.85 $14,871.60 $4,172.84 $19,044.44
19 $826.20 $519.81 $15,697.80 $4,692.66 $20,390.46
20 $826.20 $555.71 $16,524.00 $5,248.37 $21,772.37
21 $826.20 $592.57 $17,350.20 $5,840.94 $23,191.14
22 $826.20 $630.41 $18,176.40 $6,471.35 $24,647.75
23 $826.20 $669.26 $19,002.60 $7,140.60 $26,143.20
24 $826.20 $709.14 $19,828.80 $7,849.74 $27,678.54
25 $826.20 $750.09 $20,655.00 $8,599.84 $29,254.84
 

Lewis.T

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Hello folks, just to clarify, he is indeed correct with his calculation at around 2.64%, the premiums are done monthly instead of a lump sum.

There are of course other benefits to the plan on top of the interest given, such as a small but not negligible amount of coverage, waiver of all future premiums upon critical illness etc that he may not have stated.

Also, a projection is just a projection, it still can go both ways, he might get even lesser than projected, or more. So far Prudential has been doing ok on our side, and we have increased projected yields for some of our plans in recent years.

Whatever I say here however, may not apply to you guys because you are more financially savvy than the average layman, and hence will be prejudiced against endowment plans. You are right in that sense. If you can DIY and have a basic understanding of investments, I encourage you to go for it.

If you are investment adverse, endowment plans might be the way to go instead of putting in it fixed deposits every year or leaving it in a savings account if you want to generate higher returns in the long term.
 
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Perisher

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Not calculated that way... Premiums are not paid upfront in one shot.

Ya, I figured. Anyway, it's not 0.18%, its 1.8% or around there on a absolute simplified basis.

i.e.
9k/20k=45%/25years=1.8%p.a.

Not as low as I thought.
If you wanna calculate the yearly premium instead of lump sum, need another formula.
Probably closer to the 2.64% as someone else has calculated.
 

chopra

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Ya, I figured. Anyway, it's not 0.18%, its 1.8% or around there on a absolute simplified basis.

i.e.
9k/20k=45%/25years=1.8%p.a.

Not as low as I thought.
If you wanna calculate the yearly premium instead of lump sum, need another formula.
Probably closer to the 2.64% as someone else has calculated.

Arithmetic geometric progression aka
Apgp aka
Annuity formula
 

Asure7

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To me, guaranteed values are very important for an "education fund". I'm not "investing" to try reaching a certain target; I MUST have that target amount by a specific time.

Going by that, I solely looked at the guaranteed sum. Anything extra from the non-guaranteed is a bonus.

Anyway, my plan was bought in 2012.
Guaranteed sum at maturity = 100K
Projected Non-guaranteed = 21,176 (3.75%) / 39,574 (5.25%)

Annual premium = $6,436.15 (payable for 15 years, end at 17 years)
*$6336 without Enhanced Buyer Benefit Rider

Of course, with a total basic premium sum of about $95K, the returns seem pathetic. But I have my own reasons: I wanted a guaranteed portion that at least matches my total premium paid (capital-guaranteed). In my case, I told my FA I want 100K guaranteed, dont care about non-guaranteed, and make sure my total premiums paid do not exceed that. Made his life so easy...

Just a side note...If i had bought the plan 3 years earlier before the economic downturn, the premium was actually around 50% lower! Can only blame myself for not being decisive enough to get it then.

If you go for the "big names", the non-guaranteed part usually makes up a large portion of the projected maturity sum. If you want high guaranteed value (especially one that exceeds the total premium paid), there are only 1 or 2 companies available for that.
 
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w1rbelw1nd

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To me, guaranteed values are very important for an "education fund". I'm not "investing" to try reaching a certain target; I MUST have that target amount by a specific time.

Going by that, I solely looked at the guaranteed sum. Anything extra from the non-guaranteed is a bonus.

Anyway, my plan was bought in 2012.
Guaranteed sum = 100K
Projected Non-guaranteed = 21,176 (3.75%) / 39,574 (5.25%)

Annual premium = $6,436.15 (payable for 15 years, end at 17 years)
*$6336 without Enhanced Buyer Benefit Rider

Of course, with a total basic premium sum of about $95-96K, the returns seem pathetic. But I have my own reasons.

Just a side note...If i had bought the plan 2-3 years earlier before the economic downturn, the premium was actually around 50% lower!

If you go for the "big names", the non-guaranteed part usually makes up a large portion of the projected maturity sum. If you want high guaranteed value (especially one that exceeds the total premium paid), there are only 1 or 2 companies available for that.

I can understand your view. Have you considered buying 100% of the money on Singapore government bonds instead of endowments? The annual returns is around 2.5%, and it is probably as safe an asset you can get (I would say even safer than guaranteed portion of insurance company)
 
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