Things you should read before buying an endowment plan

[pandallas]

Hi, I need some advice from you guys. I bought the PruFlexiCash together with my mum 3 years ago (24y/o then). Back then, I was financially illiterate and my mum wanted me to buy a savings plan, but the UOB financial agent intro-ed us PruFlexiCash. I bought the 25 years plan while my mum bought the 15 years.

Now, I regretted my actions for blindly signing a policy without understanding what it is. If I surrender now, I will lose about $7k which is a considerable sum to me. My alternative is to start withdrawing out the cashback and use it to invest in ETF/bonds. Is this a feasible idea? Should I do likewise for my mum? She will be 68 years old when the policy matures.

 

[R2R_AIA]

You might want to share more. Like your annual premium and their projected BI, cashback amount.

Hi, I need some advice from you guys. I bought the PruFlexiCash together with my mum 3 years ago (24y/o then). Back then, I was financially illiterate and my mum wanted me to buy a savings plan, but the UOB financial agent intro-ed us PruFlexiCash. I bought the 25 years plan while my mum bought the 15 years.

Now, I regretted my actions for blindly signing a policy without understanding what it is. If I surrender now, I will lose about $7k which is a considerable sum to me. My alternative is to start withdrawing out the cashback and use it to invest in ETF/bonds. Is this a feasible idea? Should I do likewise for my mum? She will be 68 years old already when the policy matures.

 

[pandallas]

Policy Term: 25 years
Monthly Premium: $307.93
Annual Premium: $3622.61
Yearly cashback: $2275

Option 1: 5% Yearly Cashback
Maturity value projected at 3.25% investment return
Total premiums paid: $90,568
Guaranteed: $2275
Non-guaranteed: $44,122
Total: $46,397

Option 2: Accumulate Cashback
Maturity value projected at 3.25% investment return
Total premiums paid: $90,568
Guaranteed: $54,600
Non-guaranteed: $54,663
Total: $109,263

I did not include the projected at 4.75% investment return because let's not be too optimistic.

 

[bibu00]

Policy Term: 25 years
Monthly Premium: $307.93
Annual Premium: $3622.61
Yearly cashback: $2275

Option 1: 5% Yearly Cashback
Maturity value projected at 3.25% investment return
Total premiums paid: $90,568
Guaranteed: $2275
Non-guaranteed: $44,122
Total: $46,397

Option 2: Accumulate Cashback
Maturity value projected at 3.25% investment return
Total premiums paid: $90,568
Guaranteed: $54,600
Non-guaranteed: $54,663
Total: $109,263

I did not include the projected at 4.75% investment return because let's not be too optimistic.

Hi, your personal ROI for option 2 accumulate cash back is 1.4% p.a.

I.e. If the money you invested work really hard and generate a 3.25% return per year, you'll only be getting around 1.4% compound interest for 25 years.

At the end of 35years, if your fund did perform at 3.25%, you'll be paying approx $32k to fees and your agent's new BMW. (calculated by using yearly premium 3.25% compounding - projected total value)


The rest is really up to you to decide. It's not likely to make a loss, but it's the opportunity cost that kills.

I surrendered my policy at a 6k loss.
Hope your agent name is not Jennifer teo. She knows nothing and is super good smoking answers.

Use this compound interest calculator to check
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

 

[Shion]

PruFlexiCash again

 

[akwl88]

Dont know why pay insurance coy so much money when they cant guranteed returns. Might as well ownself invest so you are reaponsible for your own losses/gains.

 

[MikeDirnt78]

Hi, I need some advice from you guys. I bought the PruFlexiCash together with my mum 3 years ago (24y/o then). Back then, I was financially illiterate and my mum wanted me to buy a savings plan, but the UOB financial agent intro-ed us PruFlexiCash. I bought the 25 years plan while my mum bought the 15 years.

Now, I regretted my actions for blindly signing a policy without understanding what it is. If I surrender now, I will lose about $7k which is a considerable sum to me. My alternative is to start withdrawing out the cashback and use it to invest in ETF/bonds. Is this a feasible idea? Should I do likewise for my mum? She will be 68 years old when the policy matures.

you need to decide fast and be firm. you either lose $7k now or risk your $90k-7k that you are going to pay for the next 22 years.

for my case, i terminated my prusave too and lost about $6k. not really a big deal as i managed to recoup those losses a few years down the road by collecting dividends from stocks.

you have many good years and a bright future ahead. so take it as an expensive learning lesson. if you take option 2, you will end up like an expensive term insurance and a lousy FD.

for your mother's case, i guess she can just let the policy continue if she can still afford the premiums. her policy is maturing in 12 years only.

PS: Before terminating, sign up for some term insurance as an interim protection.

 

[bibu00]

PruFlexiCash again

What u expect bro, u can see from my post shes gonna pay $32k over 25 years, while the agent only need to talk for an hour and prudential do basically nothing.

Somemore its legal to use the words "protection" "savings" "cashback" "3.25% returns vs FIXD 1.6%". the plan basically sells itself!

Super good plan to sell, which kumgong agent wont push this plan?

 

[koja6049]

really think government should rein in all these insurance nonsense, to me this is false advertising and should be dealt with the law accordingly

 

[Pandule]

Pru flexible cash is the worst I think

But there's some Aviva one which my agent show me. Aviva my wealth plan. Pay 10 years. Get payout in 15th year. Pay about 3k. Guaranteed > premium

If XIRR only with guaranteed is about 0.8% lol

But if you add in the 4.75% it goes up to about 3.78%

 

[akwl88]

Imo, if you are gg to give your money for them to invest, there should be no non-guranteed or very little % portion.

 

[pandallas]

Thanks bibu00 and MikeDirnt78. Your replies were really helpful to me.

 

[spiritGate]

Hahaha is like asking someone to invest for you and the agent know nuts about what the company investing... And some of the agent mention that the percentage is just an aim that the company set but if u go to the roadshow or agents on the street most of them tell those ppl that they confirm can get this returns

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[akwl88]

Hahaha is like asking someone to invest for you and the agent know nuts about what the company investing... And some of the agent mention that the percentage is just an aim that the company set but if u go to the roadshow or agents on the street most of them tell those ppl that they confirm can get this returns

Sent from sent from gagt using GAGT

misleading? or?

 

[spiritGate]

misleading? or?

Few years back i nearly sign up for such plan but luckily last min give up signing forgot whats the reason. The agent keep telling me that i will get that returns stated on the form and tell me how good it is.. Not sure whether is misleading or trying to bluff ppl to sign up

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[Asphodeli]

I actually dropped my premium on my PruFlexiCash from $300++ a month down to minimum about $100 a month. Will hold till maturity.

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[Initiatives]

Mine is prusave limited plan. Pay 200 monthly for 15 years. Then 16th to 25th year don't need pay. 25th year mature. Wonder shld I surrender and use it to invest in etf instead.

 

[bibu00]

Mine is prusave limited plan. Pay 200 monthly for 15 years. Then 16th to 25th year don't need pay. 25th year mature. Wonder shld I surrender and use it to invest in etf instead.

Then prolly your guaranteed is more than premium paid. But still need to calculate your cgar, you'll most likely be paying ridiculous fees too.

 

[ryuunix]

Just to share my expertise, if you are going into endowment (maybe because of your risk profile or you just wanna do diversification), then always lookout for the guaranteed returns, if not it doesn't make sense for you to save up the money there. if the guaranteed amount is the same value or slightly higher than the total premium paid, then you are quite scrowed haha, to be stucked with the plan for 20 years at least.

If your agent entice you on the non-guaranteed returns, I advise you getting into investment instruments that have more stable returns (at least a nice 4 to 5% annualised returns or dividend) instead, which will definitely outperform those of endowment, plus there is not lock-in period.

 

[pandallas]

How did you do that? By withdrawing the yearly cashback or?

I actually dropped my premium on my PruFlexiCash from $300++ a month down to minimum about $100 a month. Will hold till maturity.