AIA Prime Life

[luvpraline]

Appreciate if I could get some advice for a family member's policy. From the information I can find online, the policy seems to have 3 components which I'm unfamiliar with...

1) APWP/BASIC (What's this?):
Sum Assured: $ 100,000.00

2) ECL SPECIAL (What's this?):
Sum Assured: $ 100,000.00
Premium breakdown: $ 469.00

3) PRIME LIFE (AC):
Sum Assured: $ 100,000.00
Premium breakdown: $ 1,391.00

He has been paying $ 1,860.00 annually since 2007. That's about $24k worth of premiums paid in 13 years..

Sadly, the current Net Surrender Value shown on AIA's website is a miserable $ 16k

According to the latest Participating Policy Annual Statement:
Plan Name : PRIME LIFE (AC)
FaceAmount : S$ 100,000.00

Accumulated Reversionary Bonus as at Feb 2020 : S$ 12,148.13
Reversionary Bonus to be credited on Mar 2020 : S$ 1,076.62
If you surrender your policy or accumulated reversionary bonuses, only a proportion of the accumulated reversionary bonuses will be paid.

Reversionary Bonus Rate from 2007 to 2020:
0.960% (as % of FaceAmount)
0.960% (as % of Accumulated Reversionary Bonus)

I've also attached the "projected yields at surrender":



Appreciate if someone could shed some light on these questions:

1) Is the sum assured 100k or 300k?
2) What's Reversionary Bonus? Is it the annual rate of return?
3) Are the projected yields by this policy likely to happen based on AIA's history?
4) At what age should he surrender this policy? He is currently 35.

Thank you!

 

[tangent314]

You should probably contract the insurance agent to explain the terms to you. You should also obtain from the agent the latest updated Revised Benefits Illustration and post it up here so that we can appraise the policy better.

I *believe* that APWP refers to Advanced Payment & Waiver of Premium rider, which is AIA's name for TPD (Total and Permanent Disability) coverage which will out the death benefit (not necessarily as a lump sum) when the policy holder suffers a TPD, and all future premium is waived.

ECL I *believe* refers to their Critical Illness rider. I'm not sure if the E refers to early critical illness, but that is possible. It is most probably at least an accelerated CI, which means the sum assured is $100k - you can only claim the $100k once even if the policy holder suffers from all 3 - TPD and a CI and death

As for the rest of the questions, we need the RBI to answer.

 

[Value.Matrix]

Appreciate if I could get some advice for a family member's policy. From the information I can find online, the policy seems to have 3 components which I'm unfamiliar with...

1) APWP/BASIC (What's this?):
Sum Assured: $ 100,000.00

2) ECL SPECIAL (What's this?):
Sum Assured: $ 100,000.00
Premium breakdown: $ 469.00

3) PRIME LIFE (AC):
Sum Assured: $ 100,000.00
Premium breakdown: $ 1,391.00

He has been paying $ 1,860.00 annually since 2007. That's about $24k worth of premiums paid in 13 years..

Sadly, the current Net Surrender Value shown on AIA's website is a miserable $ 16k

According to the latest Participating Policy Annual Statement:
Plan Name : PRIME LIFE (AC)
FaceAmount : S$ 100,000.00

Accumulated Reversionary Bonus as at Feb 2020 : S$ 12,148.13
Reversionary Bonus to be credited on Mar 2020 : S$ 1,076.62
If you surrender your policy or accumulated reversionary bonuses, only a proportion of the accumulated reversionary bonuses will be paid.

Reversionary Bonus Rate from 2007 to 2020:
0.960% (as % of FaceAmount)
0.960% (as % of Accumulated Reversionary Bonus)

I've also attached the "projected yields at surrender":



Appreciate if someone could shed some light on these questions:

1) Is the sum assured 100k or 300k?
2) What's Reversionary Bonus? Is it the annual rate of return?
3) Are the projected yields by this policy likely to happen based on AIA's history?
4) At what age should he surrender this policy? He is currently 35.

Thank you!

Sum assured is definitely $100k. Its all accelerated from past experience with the policies. But best to get the policy contract just in case it differs.

The sum assure also increase with the accumulated bonus, so the death benefit also increases. The policy terminates (if its accelerated riders) when any of the following hits: death, tpd, or CI.

Surrender should be done when the IRR is the highest imho or at least dropping (so likely before age 65). If you want to surrender now, i will buyover. Can earn a lot for me. Just saying.

If you do not need the CI benefit, can cancel the rider. Treat it like a bond. But that's what i think.

 

[Xwzlol]

Appreciate if I could get some advice for a family member's policy. From the information I can find online, the policy seems to have 3 components which I'm unfamiliar with...

1) APWP/BASIC (What's this?):
Sum Assured: $ 100,000.00

2) ECL SPECIAL (What's this?):
Sum Assured: $ 100,000.00
Premium breakdown: $ 469.00

3) PRIME LIFE (AC):
Sum Assured: $ 100,000.00
Premium breakdown: $ 1,391.00

He has been paying $ 1,860.00 annually since 2007. That's about $24k worth of premiums paid in 13 years..

Sadly, the current Net Surrender Value shown on AIA's website is a miserable $ 16k

According to the latest Participating Policy Annual Statement:
Plan Name : PRIME LIFE (AC)
FaceAmount : S$ 100,000.00

Accumulated Reversionary Bonus as at Feb 2020 : S$ 12,148.13
Reversionary Bonus to be credited on Mar 2020 : S$ 1,076.62
If you surrender your policy or accumulated reversionary bonuses, only a proportion of the accumulated reversionary bonuses will be paid.

Reversionary Bonus Rate from 2007 to 2020:
0.960% (as % of FaceAmount)
0.960% (as % of Accumulated Reversionary Bonus)

I've also attached the "projected yields at surrender":



Appreciate if someone could shed some light on these questions:

1) Is the sum assured 100k or 300k?
2) What's Reversionary Bonus? Is it the annual rate of return?
3) Are the projected yields by this policy likely to happen based on AIA's history?
4) At what age should he surrender this policy? He is currently 35.

Thank you!

1. Sum assured 100K for critical illness, they pay you 100k on event early critical ilness then the rider will lapse.
Sum Assured 100K for death, they pay you 100k on event death. fyi regardless how much your accumulate Cash value, they pay you 100K ( IT IS NOT 100K + Cash Value).

2. Accumulated Cash value for your policy as at Feb 2020 : S$ 12,148.13.
3. Total Premium paid $24,180, Total Accumulated Cash Value as at Mar 2020 is $13,224.75. as your whole life plan is under value for - 50%. Note, if you surrender the policy it's not guaranteed you get $13.224.75 (probably lesser )

4. I believe the the policy coverage till age 70.


Total premium paid 24K, Sum Assured only 100K, if you keep this policy for another 13 years. It looks to me, you spent 48K to assured for 100K . this assured amount not really enough for early critical illness.

 

[Value.Matrix]

1. Sum assured 100K for critical illness, they pay you 100k on event early critical ilness then the rider will lapse.
Sum Assured 100K for death, they pay you 100k on event death. fyi regardless how much your accumulate Cash value, they pay you 100K ( IT IS NOT 100K + Cash Value).

2. Accumulated Cash value for your policy as at Feb 2020 : S$ 12,148.13.
3. Total Premium paid $24,180, Total Accumulated Cash Value as at Mar 2020 is $13,224.75. as your whole life plan is under value for - 50%. Note, if you surrender the policy it's not guaranteed you get $13.224.75 (probably lesser )

4. I believe the the policy coverage till age 70.


Total premium paid 24K, Sum Assured only 100K, if you keep this policy for another 13 years. It looks to me, you spent 48K to assured for 100K . this assured amount not really enough for early critical illness.

Hmm. I have studied death benefit table and Benefit illustration table. Very different from what you mention.

Those apply to whole life multiplier plans from what i know only. But i may be wrong. As always, check the policy document properly. Thats my final advice because no black and white, all talk no confirmation.

 

[luvpraline]

Thank you all for your replies. The policy file is huge, but I'll try to look through them. Is it possible that the "projected surrender value" at e.g. 52 ends up being less than the premiums paid if the the policy is held to 52? Sorry if it's a silly question because I'm unfamiliar with insurance.

 

[luvpraline]

You should probably contract the insurance agent to explain the terms to you. You should also obtain from the agent the latest updated Revised Benefits Illustration and post it up here so that we can appraise the policy better.

I *believe* that APWP refers to Advanced Payment & Waiver of Premium rider, which is AIA's name for TPD (Total and Permanent Disability) coverage which will out the death benefit (not necessarily as a lump sum) when the policy holder suffers a TPD, and all future premium is waived.

ECL I *believe* refers to their Critical Illness rider. I'm not sure if the E refers to early critical illness, but that is possible. It is most probably at least an accelerated CI, which means the sum assured is $100k - you can only claim the $100k once even if the policy holder suffers from all 3 - TPD and a CI and death

As for the rest of the questions, we need the RBI to answer.

tangent314, thank you for explaining some of the confusing terms and for pointing me to get the Revised Benefits Illustration. At least, it's a start for us trying to understand this policy. My family member bought this policy 13 years ago from a distant uncle that has since been out of touch. what would you guys do in such cases?

Also for the Advanced Payment & Waiver of Premium rider, you mentioned that when the policy holder suffers a TPD, all future premium is waived. Does that mean that the coverage will still continue but he can stop paying premiums?

 

[tangent314]

Contact the AIA helpdesk, quote the policy number, and they will help put you in touch with your agent, or a replacement agent.

You should confirm this with your agent, but my understanding is that once your TPD claim is approved, all premium payment is waived and you will receive payment in installments for a period (2.5 years?) followed by a lumpsum at the end of the period after which the plan terminates.

When you receive your RBI with the updated detailed projections, you will see that they are split into Guaranteed and Non-Guaranteed columns. The Guaranteed amount is exactly what it is called - the amount you are guaranteed to get, and this may be less than premium paid. In all likelihood though, the amount you will actually receive will be closer to the G+NG amount than just the G amount, but this will all depend on the performance of the markets for the years to come.

 

[Hafi]

tangent314, thank you for explaining some of the confusing terms and for pointing me to get the Revised Benefits Illustration. At least, it's a start for us trying to understand this policy. My family member bought this policy 13 years ago from a distant uncle that has since been out of touch. what would you guys do in such cases?

contact your latest assigned agent, his/her contact can be found on the most recent AIA invoice or whatever AIA sent you when you renew the policy. Agent agency and name will be printed on the policy or renewal notice AIA sent you.

 

[Xwzlol]

Thank you all for your replies. The policy file is huge, but I'll try to look through them. Is it possible that the "projected surrender value" at e.g. 52 ends up being less than the premiums paid if the the policy is held to 52? Sorry if it's a silly question because I'm unfamiliar with insurance.

Cost of insurance getting expensive based on age. easy to say, it might erode accumulate cash value over time, but it will reach break even point at sometime in the future.

I learned hard way from my own prudential policy, it took 17 years to reach cash value just equal with total premium paid. anyway I have surrender it due to the sum assured amount not really much. as the need change, Now I bought term insurance with no cash value which is cheaper but give better sum assured for protection (for benefit family members).

 

[soneat]

Appreciate if I could get some advice for a family member's policy. From the information I can find online, the policy seems to have 3 components which I'm unfamiliar with...

1) APWP/BASIC (What's this?):
Sum Assured: $ 100,000.00

2) ECL SPECIAL (What's this?):
Sum Assured: $ 100,000.00
Premium breakdown: $ 469.00

3) PRIME LIFE (AC):
Sum Assured: $ 100,000.00
Premium breakdown: $ 1,391.00

He has been paying $ 1,860.00 annually since 2007. That's about $24k worth of premiums paid in 13 years..

Sadly, the current Net Surrender Value shown on AIA's website is a miserable $ 16k

According to the latest Participating Policy Annual Statement:
Plan Name : PRIME LIFE (AC)
FaceAmount : S$ 100,000.00

Accumulated Reversionary Bonus as at Feb 2020 : S$ 12,148.13
Reversionary Bonus to be credited on Mar 2020 : S$ 1,076.62
If you surrender your policy or accumulated reversionary bonuses, only a proportion of the accumulated reversionary bonuses will be paid.

Reversionary Bonus Rate from 2007 to 2020:
0.960% (as % of FaceAmount)
0.960% (as % of Accumulated Reversionary Bonus)

I've also attached the "projected yields at surrender":



Appreciate if someone could shed some light on these questions:

1) Is the sum assured 100k or 300k?
2) What's Reversionary Bonus? Is it the annual rate of return?
3) Are the projected yields by this policy likely to happen based on AIA's history?
4) At what age should he surrender this policy? He is currently 35.

Thank you!

1. APWP stands for Advance Payment Waiver of Premium
Upon TPD, AIA will advance the payout from your policy typically x years. During this period, the policy is still in force and the premium is waived.

In simple English, this is just a TPD rider that accelerates the payout from the whole life policy stretched over x years.

2. ECL Special stands for Enhanced Critical Life Special Supplementary Contract.

In simple English, this is just a normal CI (30 CI) rider that accelerates the payout from the whole life policy.

3. Prime Life AC basically means it is series AC of the Prime Life product.

4. Basic Sum Assured is 100K.

5. Whole life policy typically have reversionary bonus (aka annual bonus) and terminal bonus. Different insurer/plan have different structure, which the insurer can change any time at their sole discretion. The more ethical insurers typically stick to the projection or try their best not to deviate too much from their initial projection.

6. Reversionary Bonus is not IRR.

7. I am an AIA policyholder but I do not trust them. "Yield" depends on your entry age and how long you keep the policy. Do yourself a favour and request for the bonus tables to see which year the terminal bonus is maximised. The last I check, it was Year 20.

8. Age to surrender depends on circumstances. Do you still need the insurance or are you treating this as a pseudo-bond? Like I mentioned, ask for an updated benefit illustration table and the bonus tables (so that u can see how the product is structured).
However, since I have a similar policy (series AB) and similar entry age, I would say/suggest that the ideal age to maximise the surrender value payout is around 47-50 range.

 

[a4973]

1. APWP stands for Advance Payment Waiver of Premium
Upon TPD, AIA will advance the payout from your policy typically x years. During this period, the policy is still in force and the premium is waived.

In simple English, this is just a TPD rider that accelerates the payout from the whole life policy stretched over x years.

2. ECL Special stands for Enhanced Critical Life Special Supplementary Contract.

In simple English, this is just a normal CI (30 CI) rider that accelerates the payout from the whole life policy.

3. Prime Life AC basically means it is series AC of the Prime Life product.

4. Basic Sum Assured is 100K.

5. Whole life policy typically have reversionary bonus (aka annual bonus) and terminal bonus. Different insurer/plan have different structure, which the insurer can change any time at their sole discretion. The more ethical insurers typically stick to the projection or try their best not to deviate too much from their initial projection.

6. Reversionary Bonus is not IRR.

7. I am an AIA policyholder but I do not trust them. "Yield" depends on your entry age and how long you keep the policy. Do yourself a favour and request for the bonus tables to see which year the terminal bonus is maximised. The last I check, it was Year 20.

8. Age to surrender depends on circumstances. Do you still need the insurance or are you treating this as a pseudo-bond? Like I mentioned, ask for an updated benefit illustration table and the bonus tables (so that u can see how the product is structured).
However, since I have a similar policy (series AB) and similar entry age, I would say/suggest that the ideal age to maximise the surrender value payout is around 47-50 range.

Hi there soneat, I have the AB series as well and have read your very informative post. Reference your para 8, I'm requesting for an updated BI. Could you please advise me what to look for on the updated BI to determine the maximum surrender value? I do not need the insurance coverage, just want to"lose" less.
Thanks for your help.

 

[tangent314]

You can put the numbers in a spreadsheet and calculate the IRR for each surrender year, this will give you an idea of the good times to surrender.

 

[soneat]

Hi there soneat, I have the AB series as well and have read your very informative post. Reference your para 8, I'm requesting for an updated BI. Could you please advise me what to look for on the updated BI to determine the maximum surrender value? I do not need the insurance coverage, just want to"lose" less.
Thanks for your help.

Like what mod mentioned, you can put the numbers in a spreadsheet and calculate the IRR. But do bear in mind that all the numbers are projected - so if AIA decides to adjust the terminal bonus / reversionary bonus downwards, the whole projection will change. Usually most people ask for the latest projection (i.e. the latest benefit illustration). For me, I ask for the bonus tables as well. My entry age was ~24 yo and optimal cashout age around 48 or 49. Just a few more years to go....

 

[Xwzlol]

Like what mod mentioned, you can put the numbers in a spreadsheet and calculate the IRR. But do bear in mind that all the numbers are projected - so if AIA decides to adjust the terminal bonus / reversionary bonus downwards, the whole projection will change. Usually most people ask for the latest projection (i.e. the latest benefit illustration). For me, I ask for the bonus tables as well. My entry age was ~24 yo and optimal cashout age around 48 or 49. Just a few more years to go....

Nice, don't forget come here to share,,, little share help many people.

 

[a4973]

this is the BI which i auto generated via the AIA portal.
it seems pretty clear that the nearest best time to surrender will be at Year 20 is that correct?
any other comments pertaining to this policy are all welcomed
thanks a lot.

https://drive.google.com/file/d/1OY45d4hd_L72XtYzQRqo-pn9mdp6VlcX/view?usp=sharing

 

[luvpraline]

Contact the AIA helpdesk, quote the policy number, and they will help put you in touch with your agent, or a replacement agent.

You should confirm this with your agent, but my understanding is that once your TPD claim is approved, all premium payment is waived and you will receive payment in installments for a period (2.5 years?) followed by a lumpsum at the end of the period after which the plan terminates.

When you receive your RBI with the updated detailed projections, you will see that they are split into Guaranteed and Non-Guaranteed columns. The Guaranteed amount is exactly what it is called - the amount you are guaranteed to get, and this may be less than premium paid. In all likelihood though, the amount you will actually receive will be closer to the G+NG amount than just the G amount, but this will all depend on the performance of the markets for the years to come.

Thank you again, tangent314 Will get the RBI and bonus tables first.

 

[luvpraline]

1. APWP stands for Advance Payment Waiver of Premium
Upon TPD, AIA will advance the payout from your policy typically x years. During this period, the policy is still in force and the premium is waived.

In simple English, this is just a TPD rider that accelerates the payout from the whole life policy stretched over x years.

2. ECL Special stands for Enhanced Critical Life Special Supplementary Contract.

In simple English, this is just a normal CI (30 CI) rider that accelerates the payout from the whole life policy.

3. Prime Life AC basically means it is series AC of the Prime Life product.

4. Basic Sum Assured is 100K.

5. Whole life policy typically have reversionary bonus (aka annual bonus) and terminal bonus. Different insurer/plan have different structure, which the insurer can change any time at their sole discretion. The more ethical insurers typically stick to the projection or try their best not to deviate too much from their initial projection.

6. Reversionary Bonus is not IRR.

7. I am an AIA policyholder but I do not trust them. "Yield" depends on your entry age and how long you keep the policy. Do yourself a favour and request for the bonus tables to see which year the terminal bonus is maximised. The last I check, it was Year 20.

8. Age to surrender depends on circumstances. Do you still need the insurance or are you treating this as a pseudo-bond? Like I mentioned, ask for an updated benefit illustration table and the bonus tables (so that u can see how the product is structured).
However, since I have a similar policy (series AB) and similar entry age, I would say/suggest that the ideal age to maximise the surrender value payout is around 47-50 range.

Wow, thank you so much for the helpful reply, soneat! Will update again after I get the benefit illustration table and the bonus tables.

 

[tangent314]

this is the BI which i auto generated via the AIA portal.
it seems pretty clear that the nearest best time to surrender will be at Year 20 is that correct?
any other comments pertaining to this policy are all welcomed
thanks a lot.

https://drive.google.com/file/d/1OY45d4hd_L72XtYzQRqo-pn9mdp6VlcX/view?usp=sharing

Not necessarily. It looks like you get a nice bonus at age 20, and while your increment after that isn't as high as the year 20 bump, it's still quite substantial. We can't work out the IRR after 20 without knowing your annual premium paid though. I'm assuming it's not 0 because otherwise you will be getting 6.7% per year.

 

[Value.Matrix]

You can put the numbers in a spreadsheet and calculate the IRR for each surrender year, this will give you an idea of the good times to surrender.

Honestly, i would look at yearly yield instead. Whatever you put in (from the start) is not worth knowing. The opportunity cost per year is more worth. Especially after year 20 (where most bonus is given).

Because you could earn 4% interest in cpf SA (unless this is max out). I see WL as a cash replacement for CPF SA after 20 years (where most terminal bonus is given).

Some others might want to look at death benefit (which has a higher value compare to surrender) if left as a legacy.