Tokio Marine VIP Infinite

HWZ1973

Master Member
Joined
Feb 14, 2007
Messages
3,517
Reaction score
126
Hello savvy investors out there, please help me review and comment this policy as follows:

Tokio Marine Infinite VIP - Lifetime Income, financing applicable and optional
Assuming a Single Premium of $533,400 - that yields an income stream of $2k / month for life after the 5th year - which translates to $24k per anmum (all in SGD):
Return on Investment (Without Leverage) = 24,000 / 533,400 = 4.5%p.a.

Assuming the same scenario but with Leverage Financing applied:
Upfront Cash = 40% x $533,400 = $213,360
Financing amount = 60% x $533,400 = $320,040
Interest applied @ SIBOR3M + 0.75% = $320,040 x 1.45% = $4,640.58 per year (approximately)

Therefore,
Nett outlay over 5 years = $213,360 + (5 x $4,640.58) = $236,562.90
Nett annual Income = ($24,000 - $4,640.58) / $236,562.90 = 19359/236563 = 8.18% (an income stream of approximately $19,359 per year!)

Assuming the scenario where SIBOR3M increases to 2.25% (that's 300% the current rate!)
Therefore total interest rate = 0.75+2.25 = 3.00%
Cost of Financing per year = $320,040 x 3.00% = $9601.20 per year
Nett outlay over 5 years = $213,360 + (5 x $9601.20) = $261,366
Nett Income = ($24,000 - $9601.20) / $261,366 = 5.51%

Also do include the Death Benefit of 101-105% of the initial $533,400.
 

chins

Senior Member
Joined
May 11, 2001
Messages
962
Reaction score
8
Are you a retiree with a need for a steady income stream?

If yes, then I think it is decent. Just remember that a large part of the payout in non-guaranteed.

If not, then you can consider higher risk instruments which can potentially bring you higher capital returns.

Leverage financing is all right at this point when interest rates are still relatively low. Just make sure u have enough to pay off when interest rates rises.
 

limster

Arch-Supremacy Member
Joined
Oct 31, 2000
Messages
11,419
Reaction score
2,431
For the first 5 years, you have no dividends so you lose $24,000 x 5=$120,000
In other words, your policy cost is something like, $533,400+$120,000.

Still, it appears fair because they seem to be promising that if the participating fund delivers 4.75%, you will get 4.5%. The participating fund may have an expense ratio of about 2% (this is a big assumption, who knows if their expenses may be even higher) so their total haircut per year is 'only' 2.25%+?

Still there are many 'ifs'. If a market drops 5% in 2016, you get no bonus dividend. But in 2017 it gains 6%. In 2017 do you get the non-guaranteed bonus dividend or does the insurer say no dividend as 2017 merely 'recovered' the loss in 2016 rather than an actual 4.75% return.

The next big 'IF'. The market has a super year and soars 10%/20%/30%. Will Tokio Marine give you the same dividend of 4.5%? Have they published anywhere a chart that says how much they will give you in times of super gain?

I still think it looks attractive enough for a 5% allocation of your portfolio, instead of bonds because yields are so bad now? But when bond yields start hitting 5%, you could achieve the same effect as the VIP plan by buying a bond for $500,000 and collecting 'guaranteed' 5% coupons immediately rather than waiting 5 years.
 

Shiny Things

Supremacy Member
Joined
Dec 13, 2009
Messages
9,415
Reaction score
607
2k per month not guaranteed, I think that's the important thing. So if they cut the payout, you're stuffed.

Also Sibor fixed as high as 3.5% just back in 2006. So if Sibor goes back up to its recent highs, you're paying out more on the loan than you're receiving from the insurance policy. Again, you're stuffed.

And if you die late, you're stuffed, because your death benefit is getting repaid in future dollars, which are worth less because of inflation.

And then what are you supposed to do if you need some cash now? Liquidating the policy is going to have huge penalties attached to it, which'll make it harder to repay the loan, so you're stuffed.

And on top of everything you're taking Tokio Marine's credit risk. They're a AA-negative, which I guess is fine.

Basically - just stick the money in a diversified bond fund and you'll do just as well without lining your insurance agent's pockets.
 

limster

Arch-Supremacy Member
Joined
Oct 31, 2000
Messages
11,419
Reaction score
2,431
2k per month not guaranteed, I think that's the important thing. So if they cut the payout, you're stuffed.

The TS didn't provide all the details of the plan, but Tokio Marine promises that the payout of 4.5% will be given if the participating fund grows 4.75%. So there is at least an 'objective' benchmark.

The main concern is that if times are good and the participating fund soars 10/20/30%, is Tokio going to give the investor all of the extra returns, none of the returns and only just the 4.5%, or a little bit extra and subtracting a performance fee.
 

Timperial

Member
Joined
Dec 5, 2013
Messages
299
Reaction score
0
I have access to 9 insurance companies and I can say it is a good plan. Insurance companies has a 'roll-over' effect therefore even in crisis year, they are able to pay bonuses. TM Asia is one of the most reputable company that usually declare the right amount of bonuses. They are not as aggressive as other global companies which registered a 40+% loss during crisis period. As others have mentioned, their current risk exposure is AA-.

The bonuses has both guaranteed and non guaranteed, so you should also plan part of your income from stocks dividend and other guaranteed products.

Therefore, you can consider this plan as part of your retirement planning.
 

fortune111

Junior Member
Joined
Feb 28, 2015
Messages
1
Reaction score
0
I have access to 9 insurance companies and I can say it is a good plan. Insurance companies has a 'roll-over' effect therefore even in crisis year, they are able to pay bonuses. TM Asia is one of the most reputable company that usually declare the right amount of bonuses. They are not as aggressive as other global companies which registered a 40+% loss during crisis period. As others have mentioned, their current risk exposure is AA-.

The bonuses has both guaranteed and non guaranteed, so you should also plan part of your income from stocks dividend and other guaranteed products.

Therefore, you can consider this plan as part of your retirement planning.


I'm curious, since you represent 9 different companies, you would have access to all of the retuns/loss reported on the par fund.. so which company post a 40%+ loss during cirisis period??

From what I know, Prudential posted the highest loss of -23.9% in their par fund. So which company eh?

Do you know what is going on in TM right now?? Or rather the history of this company till today that caused such a big change. Not to specifically put TM Asia down.. but I think everyone should know.

TM Asia was previously known as Asia Life Singapore (not sure if I got the full name right) it was a Singapore run business. During this time, the company delivered excellent returns to its policy holders.. But in the past few years, Tokio Marine (Japanese company) acquired Asia Life and renamed it Tokio Marine Asia..

Who is Tokio Marine? They are a company that specializes in General Insurance, in particular Marine insurance.

Recently many products (endowment, life, single premium life) has been withdrawn but no details of when these products will be relaunched. So for those of you that still want to buy your legacy life time plan... so sorry... you got to wait till further notice..

The company's top management has been changed and direction is changed too.

In the past, they are really good. But in the next few years, I believe they will not be delivering what they used to deliver anymore.

Reason for this suggestion?
If I'm not wrong, when they acquired Asia Life singapore, the acquisition was mainly done by borrowing.. For those of you familiar with Manchester United, after the Glazer family bought over, from a club with positive reserves, instantly they were 800mil pounds in debt.. Recent years profits has been used to pay back this loan.

Having said that, TM Asia is still a fantastic company to do your insurance with.. Just that the past glory is gone.. so agents selling TM Asia stop harping on how good it was because things has changed.

not an agent here, just someone that happens to know about TM Asia.
 

HWZ1973

Master Member
Joined
Feb 14, 2007
Messages
3,517
Reaction score
126
Thanks to all for your valuable time and advices!
Greatly appreciate !

Gam sia!
 

HWZ1973

Master Member
Joined
Feb 14, 2007
Messages
3,517
Reaction score
126
I'm curious, since you represent 9 different companies, you would have access to all of the retuns/loss reported on the par fund.. so which company post a 40%+ loss during cirisis period??

From what I know, Prudential posted the highest loss of -23.9% in their par fund. So which company eh?

Do you know what is going on in TM right now?? Or rather the history of this company till today that caused such a big change. Not to specifically put TM Asia down.. but I think everyone should know.

TM Asia was previously known as Asia Life Singapore (not sure if I got the full name right) it was a Singapore run business. During this time, the company delivered excellent returns to its policy holders.. But in the past few years, Tokio Marine (Japanese company) acquired Asia Life and renamed it Tokio Marine Asia..

Who is Tokio Marine? They are a company that specializes in General Insurance, in particular Marine insurance.

Recently many products (endowment, life, single premium life) has been withdrawn but no details of when these products will be relaunched. So for those of you that still want to buy your legacy life time plan... so sorry... you got to wait till further notice..

The company's top management has been changed and direction is changed too.

In the past, they are really good. But in the next few years, I believe they will not be delivering what they used to deliver anymore.

Reason for this suggestion?
If I'm not wrong, when they acquired Asia Life singapore, the acquisition was mainly done by borrowing.. For those of you familiar with Manchester United, after the Glazer family bought over, from a club with positive reserves, instantly they were 800mil pounds in debt.. Recent years profits has been used to pay back this loan.

Having said that, TM Asia is still a fantastic company to do your insurance with.. Just that the past glory is gone.. so agents selling TM Asia stop harping on how good it was because things has changed.

not an agent here, just someone that happens to know about TM Asia.

Yes, you are right!

past performance does not indicate future performance...
 

aarontansp

Arch-Supremacy Member
Joined
Oct 22, 2000
Messages
13,927
Reaction score
2,158
I'm curious, since you represent 9 different companies, you would have access to all of the retuns/loss reported on the par fund.. so which company post a 40%+ loss during cirisis period??

From what I know, Prudential posted the highest loss of -23.9% in their par fund. So which company eh?

Do you know what is going on in TM right now?? Or rather the history of this company till today that caused such a big change. Not to specifically put TM Asia down.. but I think everyone should know.

TM Asia was previously known as Asia Life Singapore (not sure if I got the full name right) it was a Singapore run business. During this time, the company delivered excellent returns to its policy holders.. But in the past few years, Tokio Marine (Japanese company) acquired Asia Life and renamed it Tokio Marine Asia..

Who is Tokio Marine? They are a company that specializes in General Insurance, in particular Marine insurance.

Recently many products (endowment, life, single premium life) has been withdrawn but no details of when these products will be relaunched. So for those of you that still want to buy your legacy life time plan... so sorry... you got to wait till further notice..

The company's top management has been changed and direction is changed too.

In the past, they are really good. But in the next few years, I believe they will not be delivering what they used to deliver anymore.

Reason for this suggestion?
If I'm not wrong, when they acquired Asia Life singapore, the acquisition was mainly done by borrowing.. For those of you familiar with Manchester United, after the Glazer family bought over, from a club with positive reserves, instantly they were 800mil pounds in debt.. Recent years profits has been used to pay back this loan.

Having said that, TM Asia is still a fantastic company to do your insurance with.. Just that the past glory is gone.. so agents selling TM Asia stop harping on how good it was because things has changed.

not an agent here, just someone that happens to know about TM Asia.

Look at Ratings AA-. dont look at history.
 

Shiny Things

Supremacy Member
Joined
Dec 13, 2009
Messages
9,415
Reaction score
607
The TS didn't provide all the details of the plan, but Tokio Marine promises that the payout of 4.5% will be given if the participating fund grows 4.75%. So there is at least an 'objective' benchmark.

The main concern is that if times are good and the participating fund soars 10/20/30%, is Tokio going to give the investor all of the extra returns, none of the returns and only just the 4.5%, or a little bit extra and subtracting a performance fee.

The answer is almost definitely "only a little bit extra" - they'll hold back the excess returns and pay them out over the next few years to smooth out the bad years.

If a normal unit-trust manager or a CFO did this they'd be strung up - it's called "cookie-jar accounting" - but somehow it's OK for insurance companies.
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top