Things you should read before buying an endowment plan

bibu00

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Even if 50% cashback, the hard truth that 18k (20%) is taken out of the investment, should negate all sales pitch, benefit blablabla.
So dont give people that crap. The policy sucks for customers, and you know it, no amount of sugar coat can justify a 20% fee.

This thread is opened because I want to clarify where did the money in my policy went. Not listen to more sales pitch for the policy.

And if course I'm upset. Even 10cents given to the agent is $ into the drain. My agent adds no value to the policy, and spent only half an hour to sign my docs, no after sales services at all.
Any agent selling this policy to unsuspecting customers should not have a good night sleep.
 
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Shion

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I withdraw all the cash back and invested them in equity as i reckon it will make a better return then the 3% pru got to offer. Few years back it was 3.75, the reduce to 3.5%, then now 3%

Much as i dislike it....can only lan lan suck thumb. To be fair, manulife also reduced their interest rate for cash coupon :)

But the good thing abt this is it works like "force" savings to me.

Take out and put into investments, I agree on that :)

Ok la, unlikely you will lose money in this policy, though I felt that the total amount paid can be utilized better elsewhere.

But well, I think these plans should be targeted at those who just cannot save.
 

Shion

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They don't, but they may want to use the accumulated cashback to fund their children's education, go for a holiday and whatnot, while just leaving to accumulate till they have solid plans for said uses.

I suggest a guideline to who should be the targeted audience for saings plan

I believe those who cannot save will benefit more from such plans.
 

Lewis.T

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Take out and put into investments, I agree on that :)

Ok la, unlikely you will lose money in this policy, though I felt that the total amount paid can be utilized better elsewhere.

But well, I think these plans should be targeted at those who just cannot save.

This I agree fully with you. If you think you can manage the investments on your own, do it! You don't have to go through unnecessary expenses like distribution costs that will take away from the returns.

However please don't invest on emotion or gut feel, one of the quickest way to get burnt.

People who are suitable for this plan can include people who might do the above, or just not willing to save/invest otherwise.

Also, do take up a term plan if you need the coverage, if you ultimately do decide to cancel the policy.
 

mcylo

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Forgot to mention there is a death benefit. So if anything happen to me at least my dependent will not be too hard hit financially. :)
 

doody_

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Surprise!

Getting a good agent who helps you work towards your aims is important. Not working towards his BMW or Europe holidays.

IMO if you're savvy to calculate your returns, you're savvy enough to find your own investments. Some people don't understand basic finance concepts like compounding.

Endowments are for those who don't know how to handle their money, and want a forced savings plan for the future eg children education, house DP, etc.
 

pcmdan

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Surprise!

Getting a good agent who helps you work towards your aims is important. Not working towards his BMW or Europe holidays.

IMO if you're savvy to calculate your returns, you're savvy enough to find your own investments. Some people don't understand basic finance concepts like compounding.

Endowments are for those who don't know how to handle their money, and want a forced savings plan for the future eg children education, house DP, etc.

Totally agree with your points. But Endowments plans doesnt help one true goal in the end. Too much gone into comms for agents, insurance companies etc. those who bought endowment, if you dont believe me, please open your T&C, and see the section on Effects of Deduction. After taking so much from you, what your guarantee returns is less than the premiums you paid.

Agents love to use this, part of it goes to protecting you. Lets face it, most likely, you would already have a term plan or Whole life plan to protect you, you dont need any nonsense like that anymore.
TO me, it is just a fake lie to take part of the premiums you paid blatantly for their own Profit. No one is able to guess whether your money will go up after 25 years, since consumer are blind to what they invest, and how much returns they achieve.

The day when your policy matures, the companies will tell u....

1) we are facing a poor economic time now, the returns suck. Hence what we will give you is what you have deposited (your $$ eaten away by inflation)

2) we are facing a very poor economic time now, the returns suck. Hence what we will give you is only the guarantee portion (congrats, after your money are stuck for 25 years, you are getting less than what you saved, worst off, you are much poorer than if your $$ had being place in a FD)

3) congrats you get more than what you have paid. 10% more what you have put in. E.g. after 25 years, your total premium paid is $240K. Insurance give you back $264K. you are happy and go back telling everyone how the company helped you made $24k. Your actualreturns after 25 years? 0.83%. Much worst than putting in a bank again.
 

bibu00

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1. The death benefit is a joke. With the 18k over 15 years, I can buy the most basic aviva Saf and cover myself for ONE MILLION SGD. And even have some kopi money left!

2. A plan that is not capital guaranteed is not for savers. Even my Milo tin can do better.
A plan that has 20% fees is not for investors.

This plan is for only 1 group of people. The agents that sell them.

To pcmdan, as much as I would like to agree with you, I don't like people using speculative figures, the gpgt I posted above should show the amount the company is taking from the policy.
 
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pcmdan

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Word of advice to people out there,

Doesnt matter how insurance companies design their Endowment plan, ultimately the biggest winner is: the company, the biggest loser is: Yourself.


Dont buy an Endowment plan just because of the cash back, free tour, free gadgets etc. You are basically paying these freebies for yourself in installment at much higher price than their cost price.
 

Shion

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1. The death benefit is a joke. With the 18k over 15 years, I can buy the most basic aviva Saf and cover myself for ONE MILLION SGD. And even have some kopi money left!

2. A plan that is not capital guaranteed is not for savers. Even my Milo tin can do better.
A plan that has 20% fees is not for investors.

This plan is for only 1 group of people. The agents that sell them.

To pcmdan, as much as I would like to agree with you, I don't like people using speculative figures, the gpgt I posted above should show the amount the company is taking from the policy.

Take note...PruFlexiCash is more of savings + protection, that is why you see the death benefit is so much higher, which also means part of your premiums are for this protection portion.

I find the high protection part unnecessary, though...But that is how this product is designed...
 

henrylbh

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I suggest a guideline to who should be the targeted audience for saings plan

I believe those who cannot save will benefit more from such plans.

You really believe that? Most likely those who cannot save will sooner or later stop paying the premiums or cash out despite a loss.
 

Shion

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You really believe that? Most likely those who cannot save will sooner or later stop paying the premiums or cash out despite a loss.

On paper, it seems suitable. In reality, it depends.

Since products are sold based on theory rather than practical, why not ?
 

mcylo

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You really believe that? Most likely those who cannot save will sooner or later stop paying the premiums or cash out despite a loss.

Me n my wife holding to prucash plan bot from different agents. Never intend to surrender unless something drastic happens to our lives. On highsight, i m glad to have purchase this in the early part of my working life when i m not as financially literate. But thats just me.

But if i can turn back the clock, well, i would have made other plans that provide better returns. I subscript to the idea of buy term invest the rest :)
 

henrylbh

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I had a 15y endowment policy with projected maturity amount of $84,700 which was about 5.85% pa return. On maturity I received only $72.053.54. But that time interest rates environment is not like these last few years. Even CPF OA was paying 3.48% and SA 4.73%.
 

bibu00

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Take note...PruFlexiCash is more of savings + protection, that is why you see the death benefit is so much higher, which also means part of your premiums are for this protection portion.

I find the high protection part unnecessary, though...But that is how this product is designed...

Boss did you do your calculations?
Someone mentioned in the previous post that the $5150 from the distribution fees goes to my insurance part of the policy. That equates to $28.6 a month for a coverage of $45k from the first year to $74k at maturity.

With $28, i can get a $200k coverage with AVIVA SAF, which i am automatically enrolled.

Dont tell me that the full $5150 is not in the insurance part. Do not forget the fact that $18k from my policy goes to prudential for whatever reasons.

Discounting this $5150, prudential is taking a fee if $13k odds over 15 years.
 
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bibu00

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I had a 15y endowment policy with projected maturity amount of $84,700 which was about 5.85% pa return. On maturity I received only $72.053.54. But that time interest rates environment is not like these last few years. Even CPF OA was paying 3.48% and SA 4.73%.

Can you also quote your monthly premiums?

I have updated my findings in the opening post.
 
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bibu00

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Annual premium paid 3,872.50 x 14 starting Feb 1997.

bHskdh3.jpg


2.8% per annual returns on investment.
5 digit figures spent on fees.
 

ochazuke

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I am looking into getting an education endowment plan for my kid, I feel that one of the attractiveness of such plans is that there is a guaranteed payout, which is more or less the same as the premiums paid. This would be helpful in a situation where the economy is bad and your ETFs (the common alternative to education endowments) have tanked and lose their value.

I suppose in a way it might make more sense to just dump the money into the CDA account and get at least 2% returns on it.

What do you guys think?
 

w1rbelw1nd

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I am looking into getting an education endowment plan for my kid, I feel that one of the attractiveness of such plans is that there is a guaranteed payout, which is more or less the same as the premiums paid. This would be helpful in a situation where the economy is bad and your ETFs (the common alternative to education endowments) have tanked and lose their value.

I suppose in a way it might make more sense to just dump the money into the CDA account and get at least 2% returns on it.

What do you guys think?

Like you say, the guaranteed portion is ONLY equals to the total premiums paid.

If you are that risk adverse, why not largely get SG government bonds that will expire around when your child is going for uni, then allocate a small portion to sti etf?
 
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