Overfunded Universal Life as alternative asset class

wts2013

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Well....there's diversity outside of HWZ forums

It's not uncommon to get Term to 100 years old plan. Let's take a fairly realistic example. 40yo, 60 years term plan that covers up to 100 yo will cost about S$5000 a year. If you have take the opportunity to load up on some reits/shares back in Feb, you would need about S$60,000 of investment in order to fund a S$5000 premium. Yes, share price goes up and down and so are the dividends but we can quite safely say that the premium is covered. In the even one dies, as long as he dies before 100year old, he will get the S$1m payout plus his S$60,000 investment is still there.

If you buy whole life insurance, basic sum assured S$500,000, it will take about 40 years to rise up to S$1m (by then 80 years old). If you buy a S$500,000 WL insurance and spread it across 10 years, you need to pay S$20,000 per annum as the premium. By the time you are 50, you have actually paid 10 x S$20000 as the premium. In the event of a payout, you get S$1m (but your cost is S$200,000).

So which case is better? 60k investment, 1.06m in total OR 200k investment, 0.8m in total (because the 200k premium is a cost)?

Your fail your maths, plus to many optimistic assumptions for term payout :s13::s13::s13:
 

sashti90

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Erm, I am not sure what UL plan you have looked at, but the one I sell has a guaranteed sum assured for death that does not decrease.

Lets say for a 45 year old non-smoker who pays a $1m single premium, the company will payout $4m. This is guaranteed up till age 125. For cash values, there are fluctuations. If one chooses credit facility or any financing schemes, of course they will have to incur charges which may affect their net cash value.

Do note that a UL plan is not comparable to a term plan. And term plan is usually taken till age 65 coz the primary purpose is to cover any loans/liabilities (mortgage loans esp) and loss of income. Usually by age 65, most ppl would retire and be free of liabilities. A UL is more like a whole life plan and is mainly used as part of estate planning- to leave behind more assets without incurring any taxes.

Term policy has 0 cash value but that's ok. The investment portion can generate more than enough returns to fund the premiums for the term policy.

In general, there are 3 options:
a) Buy Term to 100 years old + Invest
b) Buy Single premium whole life (based on par funds)
c) Buy Single premium universal life

For those who are interested to really know more, please go and take the BI, analyse it and make an informed decision.

Option (a): This will be the best option if you have some proven investment track record.
Option (b): This can be considered if entry age is early and you don't wish to do investment. Both guaranteed and non-guaranteed surrender value and protection value will grow over time.
Option (c): This is an option which I have discarded for a simple reason. The protection and surrender value can drop to ZERO at old age. One can lose both protection and investment (i.e. the single premium paid).

For (c), its usually sold to only businessman/private bank clients etc because ...
i) the feel good factor (wah....I bought the prestigious/exclusive UL....)
ii) they find the overall solution "sound" (20% cash outlay, the rest borrow @ special low interest)
 

soneat

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Erm, I am not sure what UL plan you have looked at, but the one I sell has a guaranteed sum assured for death that does not decrease.

Lets say for a 45 year old non-smoker who pays a $1m single premium, the company will payout $4m. This is guaranteed up till age 125. For cash values, there are fluctuations. If one chooses credit facility or any financing schemes, of course they will have to incur charges which may affect their net cash value.

Do note that a UL plan is not comparable to a term plan. And term plan is usually taken till age 65 coz the primary purpose is to cover any loans/liabilities (mortgage loans esp) and loss of income. Usually by age 65, most ppl would retire and be free of liabilities. A UL is more like a whole life plan and is mainly used as part of estate planning- to leave behind more assets without incurring any taxes.

OK if your plan has such a high 4m protection value guaranteed till 125yo, it sounds alright but one must really look into the BI and analyse. The plan that you sell is based on par fund or crediting rate or something else?

From the BI (from insurer G) based on crediting rate, the protection value (death benefit) can drop to 0 by policy year 40.

From the BI (from insurer P) based on par fund, the protection value (death benefit) holds.

In SG average death age for male in SGP is around 83 (among the highest in the World) and has increased about 2 years for every 10 years in the past. For a 40yo male today, one can estimate an average death age of 93 in 50year's time. 100 yo will still be only for a handful of people and term to 100 yo should more than sufficient.
 
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life_is_great

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Erm, I am not sure what UL plan you have looked at, but the one I sell has a guaranteed sum assured for death that does not decrease.

Lets say for a 45 year old non-smoker who pays a $1m single premium, the company will payout $4m. This is guaranteed up till age 125. For cash values, there are fluctuations. If one chooses credit facility or any financing schemes, of course they will have to incur charges which may affect their net cash value.

Do note that a UL plan is not comparable to a term plan. And term plan is usually taken till age 65 coz the primary purpose is to cover any loans/liabilities (mortgage loans esp) and loss of income. Usually by age 65, most ppl would retire and be free of liabilities. A UL is more like a whole life plan and is mainly used as part of estate planning- to leave behind more assets without incurring any taxes.

so good! which company's UL is that?? Care to share? pay (1mil) 25% of the sum insured as premium, guaranteed pay out of 4mil all the way till 125.

FYI, in singapore there is no estate taxes. Don't have to pay tax on inheritance. Or am I wrong?
 

MikeDirnt78

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so good! which company's UL is that?? Care to share? pay (1mil) 25% of the sum insured as premium, guaranteed pay out of 4mil all the way till 125.

FYI, in singapore there is no estate taxes. Don't have to pay tax on inheritance. Or am I wrong?

GE don't have such plans? =:p

He is from AXA.

Come to think of it, the plan is suitable if you are a millionaire. ie >10M
 

life_is_great

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GE don't have such plans? =:p

He is from AXA.

Come to think of it, the plan is suitable if you are a millionaire. ie >10M

HAHAHA. nope i'm not from GE, :D even though my user id is their tag line.. didn't realise it until i created.. I'm from an FA firm though. But yea, I really wanna know what plan is that and who is the plan provider. :s12::s12:

pay 1mil premium guaranteed to have insurance coverage of 4mil till age 125 for a 45 year old non-smoker. Only 25%.
 

Sai777

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This is great information. Some time last year, I was introduced with this Universal Life. Few months later, another RM from another bank introduce the same plan.

I was really hesitating as I am not familiar with the mechanism. Now that I am much clearer and gald that I did not take up.

Anyway, GE has such plan. The RM was from OCBC.
 

soneat

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This is great information. Some time last year, I was introduced with this Universal Life. Few months later, another RM from another bank introduce the same plan.

I was really hesitating as I am not familiar with the mechanism. Now that I am much clearer and gald that I did not take up.

Anyway, GE has such plan. The RM was from OCBC.

I think there might be several variations to such plans. Some have their protection and cash value reduced to zero at low crediting rate - this type should be avoided. If I am not wrong, you were being shown prestige harvest? Pls examine the BI at year 40 under the 2% crediting rate scenario.
 

sashti90

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Yes I am from AXA but AXA here does not sell UL yet. The UL I am talking about is from Insurer M and I have looked through the BI many times. Death Benefit is guaranteed till age 125. Cash value is pretty much tied to a par fund and yes you do start with a "loss" and break-even after 5 years or so.

My friend from M has partnered with some private banks to arrange financing schemes for ULs. So it is easy to leverage and benefit from a UL at a fraction of the cost.


GE don't have such plans? =:p

He is from AXA.

Come to think of it, the plan is suitable if you are a millionaire. ie >10M
 
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life_is_great

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Yes I am from AXA but AXA here does not sell UL yet. The UL I am talking about is from Insurer M and I have looked through the BI many times. Death Benefit is guaranteed till age 125. Cash value is pretty much tied to a par fund and yes you do start with a "loss" and break-even after 5 years or so.

My friend from M has partnered with some private banks to arrange financing schemes for ULs. So it is easy to leverage and benefit from a UL at a fraction of the cost.

okay bro. So what does Insurer M stands for??? What's the plan name?

If you cant provide the details and perhaps show the BI, then this is becoming more and more of a hoax. :D

I have compared all the ULs in the market. Haven't come across a Insurer M before...
Neither have I seen any insurers that dare to guarantee the death benefit till age 125.
Neither have I seen such a competitive premium of 1mil for 4mil coverage for a 45 year old man
5 years break even??? that's another thing that is something new! :) Even my mum's AIA UL, 500K sum insured, we paid 300K as premium failed to break even in 5 years. So yea..

So if you may, please teach me by telling me which insurer and which plan! :)
 

soneat

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Yes I am from AXA but AXA here does not sell UL yet. The UL I am talking about is from Insurer M and I have looked through the BI many times. Death Benefit is guaranteed till age 125. Cash value is pretty much tied to a par fund and yes you do start with a "loss" and break-even after 5 years or so.

My friend from M has partnered with some private banks to arrange financing schemes for ULs. So it is easy to leverage and benefit from a UL at a fraction of the cost.

Based on par fund may still be possible. This is similar to single premium whole life insurance but with lowered insurance charges due to large sum assured.

If it's really traditional UL based on 2% crediting rate, the protection may lapse even though there might be some feature or riders (e.g no lapse guarantee rider) to prevent/delay it from happening.

What's the minimum entry for this single premium Manulife policy? Do they go by minimum premium or minimum sum assured?
 
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soneat

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okay bro. So what does Insurer M stands for??? What's the plan name?

If you cant provide the details and perhaps show the BI, then this is becoming more and more of a hoax. :D

I have compared all the ULs in the market. Haven't come across a Insurer M before...
Neither have I seen any insurers that dare to guarantee the death benefit till age 125.
Neither have I seen such a competitive premium of 1mil for 4mil coverage for a 45 year old man
5 years break even??? that's another thing that is something new! :) Even my mum's AIA UL, 500K sum insured, we paid 300K as premium failed to break even in 5 years. So yea..

So if you may, please teach me by telling me which insurer and which plan! :)

Actually this is more of a single premium whole life plan. In the past, tokio Marine had the legacy vip which offered wholelife mdb but they withdrew the product. Prudential also has two similar plans but their mdb stops at 85 or 100 respectively
 

soneat

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Based on par fund may still be possible. This is similar to single premium whole life insurance but with lowered insurance charges due to large sum assured.

If it's really traditional UL based on 2% crediting rate, the protection may lapse even though there might be some feature or riders (e.g no lapse guarantee rider) to prevent/delay it from happening.

What's the minimum entry for this single premium Manulife policy? Do they go by minimum premium or minimum sum assured?
If I am not wrong, the plan is Manulife Solitaire. In the scenario sashti90 mentioned, I suspect the premium is S$1m, basic sum assured is S$2m, but there's 2x mdb which makes it S$4m

This Manulife Solitaire should be quite similar to TM Legacy VIP. TM Legacy VIP is not being sold anymore. Is this Manulife Solitaire still being sold? I have the impression that Manulife has stopped this product as well.
 

life_is_great

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Insurer M is manulife.
I do heard about coverage until you 125, it's true.
As well as the private financing from C Bank.

well, i represent Manulife. I sell their ULs from the older version to the new version. There is no way they guarantee the coverage till age 125.

Coverage is till 125 --> yes

guaranteed coverage till 125 --> NO.

If anyone say yes, show me BI then I believe. :D

For 1mil premium cover 4mil, okay la have. my mistake.:s12:
 

life_is_great

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If I am not wrong, the plan is Manulife Solitaire. In the scenario sashti90 mentioned, I suspect the premium is S$1m, basic sum assured is S$2m, but there's 2x mdb which makes it S$4m

This Manulife Solitaire should be quite similar to TM Legacy VIP. TM Legacy VIP is not being sold anymore. Is this Manulife Solitaire still being sold? I have the impression that Manulife has stopped this product as well.

yup for solitaire the coverage will not fall to zero. However, it covers till age 99. But since he said coverage till 125, it can only be Heirloom (the UL product)

Yes it's being sold. Just sold one of this 2 months ago. But the name is changed to ManuSignatureOne
 

soneat

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But heirloom is based on crediting rate right?

Solitaire and ManuSignatureOne slightly different. ManuSignatureOne mdb is till 85yo right?
 

life_is_great

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But heirloom is based on crediting rate right?

Solitaire and ManuSignatureOne slightly different. ManuSignatureOne mdb is till 85yo right?

yes. heirloom is based on crediting rate. USD policy

Solitaire has been ceased, they reintroduced MSO to replace it. It works about the same. Yes.. MDB till age 85. Is an SGD policy
 

soneat

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So what is exactly the 'UL' plan from Manulife which gives 4m mdb till 125 yo based on 1m premium (for 45yo), and based on par funds?
 

soneat

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In essence, ULs are usually US$ denominated and they have a minimum crediting rate. At the minimum crediting rate, the protection and surrender value can drop to zero. Some insurer offer 'no lapse guarantee' riders at an extra cost. Like what I mentioned repeatedly before, pls stare / look hard at the BI before taking up this type of policy.

Single premium whole life policy are based on par funds. In the past, TM Legacy VIP and Manulife Solitaire offers very long mdb. For the case of TM Legacy VIP, it's whole life. Currently, only Prudential has a plan that offers mdb up to 100yo. Imho, this type of policy is safer than UL.
 
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