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PruCash losing money?

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Old 12-01-2019, 03:25 PM   #166
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With an IRR of 3.99% over 25 years (4.75% PAR performance), this is pretty much as good as you can get for any PAR fund plans. If you believe you can find a better PAR fund savings plan from another insurer, I would be interested to see the BI.

People know that they should save money, but a lot of people don't know how to go about doing that, that is why we have insurance agents swooping in to introduce these plans to them.

Sure if I had known what I know today, I might have done my own savings.. or I might not, as back then we didn't have the platforms that we have today. Still, it's better to have started on this plan than to have left the money in the bank.
Ahhhhh sorry if I upset you. I do understand if perhaps this is one of the products u might be promoting

Anyway we are just here to share on this really lousy product so that bros can consider other products. As you can see it is not just me, but a lot of other forumers are also affected by this lousy plan.

1) potential Breakeven only at 20 yrs for a 25 yrs plan depending on performance ..... plus it is not guaranteed to breakeven even at maturity

2) mis-selling by agents/Bankers, promoting it as a saving plan ......... worst saving plan I seen

I will try to see if I can login to another insurer to check my policy which broke even in half the time needed by Prucash with higher protection....
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Old 12-01-2019, 04:23 PM   #167
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I never studied endowment plans, they seems purposefully complicated with so many variables and terms.
It is complicated yes, but not purposefully so. There's a good reason behind everything because they have to balance giving you as good a return as they can give you while staying in the green while earning a reasonable fee, having to pay their agents, and taking the risk that the equities market can go down and they still have to pay out the guaranteed sum.

Can i say the lousy 0.7% pa returns on 25 year maturity is because unlike termlife insurance, you get back your premiums on maturity? How is the coverage of prucash insurance portion?
No, simply because 0.7% is the wrong number to look at. Maybe if the stock markets goes down every year for 25 years then you will only get 0.7%, but that has not been happening.

If only needs to generate 0.7% pa over 25 years, insurers can put a portion of Par funds into some short-med term USD fixed income with banks that pay them 3-4% pa, to cover this? How can we know if the 4.75% cannot be hit over 25 years, to hit 4.75% total over quarter of decade sounds entirely reasonable leh, so whose words can we take it for?
You can check out the other thread that has been tracking PAR fund performances for the past 11 years. They have all been performing nearer to 4.75% than to 3.25%, I remember a couple of companies including Prudential actually did better than 4.75%. That's 4.75% per year not over a decade.

You can get each insurer's report on their PAR fund to find out what percentage they put into fixed income (i.e. bonds) and what percentage into equities.

Look, I'm not trying to defend the insurance companies because I'm getting anything out of it. I personally would not buy an endowment plan when I know I can simply RSP into LionGlobal All Seasons through POEMs if I'm too lazy to DCA into IWDA. But people need to understand a bit more about the plan before anyhow whack.

And especially not give terrible advise like surrendering the plans that have already been bought.
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Old 12-01-2019, 05:08 PM   #168
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Keyword Par funds returns do not translate into bonus payout directly.
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Old 12-01-2019, 05:58 PM   #169
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What you care about is how much money you get at maturity or the death benefit, based on a particular PAR fund performance. Typically a decent plan will give you 4% IRR with a PAR fund performance of 4.75% and about 2.8% with a PAR fund performance of 3.25%.

The thing you have to realize is that these plans are not like your typical investment or saving plans. The 3 common ones we come across are:

1. Fixed income. Returns are stable, guaranteed, predictable and fairly low
2. Equities. In the long run, returns are significantly higher, but are not guaranteed. If markets go down you can lose money.
3. Balanced, a mix of fixed income and equities. Long run returns are somewhere between 1 and 2. However, also not guaranteed. If equities drop A LOT you can still lose money, but no where near as much as with 2.

PAR fund plans don't fall into any of the above. It is sort of a mix between 1 and 3. On average, in the long run, your returns will be between 1 and 3 (probably nearer to 3 than 1), but unlike 3 you cannot lose money (as long as you maintain your plan to maturity) because there is a guaranteed portion. That guaranteed sum is less than with 1, of course, since the average returns will be more than 1.

So yes, there is still a place for PAR fund plans, as it provides a risk/reward profile that is not provided by the common forms of investments and savings, and the returns are in line with the risk profile as compared with the other profiles. I can't really say that people should not be targeting this risk/reward profile instead of one of the 3, so if they feel it is right for them, then PAR fund plans may be right for them.


What would really be nice is if there's a way to Direct Purchase endowment or saving plans at a discount without having to go through an agent.
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Old 12-01-2019, 06:03 PM   #170
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I think most people have the misconception abt endowment because they feel that the plan cannot 100% CONFIRM they will get the non guarantee part, they feel that self invest have a bigger chance of getting guarantee part

but let think, in life, is there anything that is REALLY guaranteed except death and tax?
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Old 12-01-2019, 06:05 PM   #171
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I think most people have the misconception abt endowment because they feel that the plan cannot 100% CONFIRM they will get the non guarantee part, they feel that self invest have a bigger chance of getting guarantee part

but let think, in life, is there anything that is REALLY guaranteed except death and tax?
Is not. Is twenty plus years of lock up for that kind of returns is not worth it even if it does return 5% a year
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Old 12-01-2019, 06:06 PM   #172
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It is complicated yes, but not purposefully so. There's a good reason behind everything because they have to balance giving you as good a return as they can give you while staying in the green while earning a reasonable fee, having to pay their agents, and taking the risk that the equities market can go down and they still have to pay out the guaranteed sum.



No, simply because 0.7% is the wrong number to look at. Maybe if the stock markets goes down every year for 25 years then you will only get 0.7%, but that has not been happening.



You can check out the other thread that has been tracking PAR fund performances for the past 11 years. They have all been performing nearer to 4.75% than to 3.25%, I remember a couple of companies including Prudential actually did better than 4.75%. That's 4.75% per year not over a decade.

You can get each insurer's report on their PAR fund to find out what percentage they put into fixed income (i.e. bonds) and what percentage into equities.

Look, I'm not trying to defend the insurance companies because I'm getting anything out of it. I personally would not buy an endowment plan when I know I can simply RSP into LionGlobal All Seasons through POEMs if I'm too lazy to DCA into IWDA. But people need to understand a bit more about the plan before anyhow whack.

And especially not give terrible advise like surrendering the plans that have already been bought.
In a nutshell, dun anyhow surrender your endowment plan. You will see the money, just be patient
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Old 12-01-2019, 06:07 PM   #173
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Is not. Is twenty plus years of lock up for that kind of returns is not worth it even if it does return 5% a year
well if you really need the money, and need liquidity, then cannot buy endowment plan of cos
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Old 12-01-2019, 06:31 PM   #174
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In a nutshell, dun anyhow surrender your endowment plan. You will see the money, just be patient
Not true lah.

If you are not financially savvy and not discipline enough, continuing the policy can be a good option.

If you are aware of the alternatives, surrendering early is a good option. Selling to the repholdings minimizes your losses.

You don't want to lock up your money for nearly 2 decades just to achieve some unknown returns.
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Old 12-01-2019, 06:39 PM   #175
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well if you really need the money, and need liquidity, then cannot buy endowment plan of cos
Build portfolio using STI ETF is a good choice. Good mix of return vs liquidity.
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Old 12-01-2019, 06:49 PM   #176
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It is complicated yes, but not purposefully so. There's a good reason behind everything because they have to balance giving you as good a return as they can give you while staying in the green while earning a reasonable fee, having to pay their agents, and taking the risk that the equities market can go down and they still have to pay out the guaranteed sum.



No, simply because 0.7% is the wrong number to look at. Maybe if the stock markets goes down every year for 25 years then you will only get 0.7%, but that has not been happening.



You can check out the other thread that has been tracking PAR fund performances for the past 11 years. They have all been performing nearer to 4.75% than to 3.25%, I remember a couple of companies including Prudential actually did better than 4.75%. That's 4.75% per year not over a decade.

You can get each insurer's report on their PAR fund to find out what percentage they put into fixed income (i.e. bonds) and what percentage into equities.

Look, I'm not trying to defend the insurance companies because I'm getting anything out of it. I personally would not buy an endowment plan when I know I can simply RSP into LionGlobal All Seasons through POEMs if I'm too lazy to DCA into IWDA. But people need to understand a bit more about the plan before anyhow whack.

And especially not give terrible advise like surrendering the plans that have already been bought.
As you can tell, i have zero knowledge of endowment plans.
Say in this example, the max liability Pru must pay Alex is $52,992, no matter if the funds did very well?
Say we take the final values, the return of 52,992 over premium paid 31,862, is about 2.4% pa over 25 years. Higher than leaving in bank accounts, but not overly high to beat inflation. However the 31,862 paid, insures Alex termlife over this period, touchwood, anything happens, his kin gets a death payout + investment returns? Makes sense this looks better than bank savings?

What, again, happens if this fund in near maturity, runs into another Gfc recession for its last 2 years. Does Pru value down the returns heavily? I guess i thinking, how much transparency does Pru gives in what they invests and how much returns they earned from it..

Hi all

This is my surrender value table


This is my maturity table

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Old 12-01-2019, 07:13 PM   #177
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As you can tell, i have zero knowledge of endowment plans.
Say in this example, the max liability Pru must pay Alex is $52,992, no matter if the funds did very well?
No, it means if the PAR funds continue to perform at 4.75%, then Alex will receive $52992. If the funds perform less than that, Alex will receive less, and if the funds perform better than 4.75%, Alex will receive more.

Say we take the final values, the return of 52,992 over premium paid 31,862, is about 2.4% pa over 25 years. Higher than leaving in bank accounts, but not overly high to beat inflation.
You are calculating it wrong. The $31862 is paid out as regular premiums, not as a lump sum. You have to use a TVM calculator to calculate the actual IRR, which will be 3.99%.

However the 31,862 paid, insures Alex termlife over this period, touchwood, anything happens, his kin gets a death payout + investment returns? Makes sense this looks better than bank savings?
When it comes to saving plans, the life insurance coverage is not very much. The main thing it's supposed to gives you is that you will get your maturity IRR if you die before maturity. Meaning you don't get penalized like you do if you surrender your plan early.

What, again, happens if this fund in near maturity, runs into another Gfc recession for its last 2 years. Does Pru value down the returns heavily? I guess i thinking, how much transparency does Pru gives in what they invests and how much returns they earned from it..
The bonus that has already been awarded to you from the previous years you remain. There will just be less bonus in the last 2 years. One thing about these PAR fund plans is that a lot of the variance is smoothened out.

People complain that the the PAR funds do very well, they don't get all of the benefits. But they need to remember that at the same time, if the PAR fund underperforms, they will still get something. A lot more than they would if they have self invested in equities. This is additional risk that is taken on by the insurance companies, that's why the returns will not be as high as a usual bonds+equities portfolio if the market is doing okay or better.
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Old 12-01-2019, 07:22 PM   #178
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If you are aware of the alternatives, surrendering early is a good option. Selling to the repholdings minimizes your losses.
would like to urge caution against such thinking... to surrender early is to confirm losses. if one does not know what he is buying, in this case one cannot wait till maturity, he should not buy in the first place.

I see endowment plans as long term saving plans at higher than FD rates. yes the tenure is damn long, but if you are disciplined with money, there should not be a need to surrender the policy.

don't forget it also comes with some form of insurance. so, it is not entirely a pure savings plan. u get some protection along the way...

one catch though, avoid buying riders with endowments as the increase in premiums can lower the returns at maturity. go for term insurance for those shortcomings like H&S.

TL;DR - surrender your plans only if you're desperate for cash. don't buy plans that you cannot hold till maturity.
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Old 12-01-2019, 08:19 PM   #179
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You wanna try https://www.repsholdings.com.sg/

Some can get a lot of money back if they sell their endowment plan
IIRC these companies only look at the original BI
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Last edited by mrclubbie; 12-01-2019 at 08:21 PM..
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Old 12-01-2019, 08:34 PM   #180
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Sharing my PruFlexiCash since we are at this topic ~

This year will be my 5th year.



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