AXA Retire Treasure (II)

[moejoseph]

[For discussion]

AXA recently announced their new Retire Treasure (II), an annuity with legacy planning option.

For example, with a monthly premium of ~$1100, paid over 15 years and a 2nd life assured appointed. Policyholder can start receiving annual payout of $6000 (16th year onwards), and 2nd life assured can continue getting this payout even after policyholder's death, up till the policyholder's supposed age of 120. Upon policy maturity, a non-guaranteed lump sum will be paid out as well.

A person who buys at age 30, will have more payout period, as compared to a person who buys it at age 40.

Sounds good?

* Assume policyholder is 1st life assured
* Guaranteed payout of $6000/year
* Non-Guaranteed bonus between 3.25% - 4.75%

 

[BBCWatcher]

Need them to release more info first, but is this a game changer?

No, because....

Any similar products in the market as well?

Yes. Manulife's Signature Income comes to mind.

One reason I think they're pretty silly is inflation, i.e. they pretend it doesn't exist. There's no guaranteed inflation escalation feature, which is surely something you'd need if you're going to design a product that runs for decades.

 

[tangent314]

No not really. I will classify this as one of the many fake-annuity retirement plans on the market which has a death benefit that grows instead of diminishing towards 0. Meaning the insurance company takes in 0 liability for your longevity, and the regular income as a percentage of the premium paid is very low.

 

[moejoseph]

No, because....


Yes. Manulife's Signature Income comes to mind.

One reason I think they're pretty silly is inflation, i.e. they pretend it doesn't exist. There's no guaranteed inflation escalation feature, which is surely something you'd need if you're going to design a product that runs for decades.

Yes strange on the inflation part, but i'm guessing if they include it, the premium will be more expensive?

AXA has a minimum $6000/year income payout required, so premium may be higher to start with.

I roughly did a run-through for an age 30. Given the minimum requirement of $6000/year payout, total premium to be paid will be $190k (over 15 years), and the person will be able to start receiving payout from age 45. By age 75, he shld have gotten his total premium back, and his children can continue receiving till his supposed age 120 (even if he passes away)

Manulife is till age 99 only? A bit confuse on how their 3 generation illustration works

 

[BBCWatcher]

Yes strange on the inflation part, but i'm guessing if they include it, the premium will be more expensive?

Or the initial payout number will be lower, or both.

These insurance companies and their marketing departments understand that many people don't comprehend inflation over these time horizons.

Manulife is till age 99 only? A bit confuse on how their 3 generation illustration works

Only for the primary policyholder. They provide a "hand-off" feature, as is typical in this sort of plan. The hand-off just needs to happen before age 99.

There are a couple other plans of this general type, as I recall ("hand-off" option annuities). Etiqa's ePREMIER eternity presto is another such plan, and there may be some others.

 

[JuniorLion]

TM retirement paycheck life.

 

[justwakeup]

Hi guys,

Checking your opinions, and to find out if there are similar products in the market.

AXA just launched AXA Retire Treasure (II), and if i'm not wrong, from the look of it, a 2nd life assured can be appointed and payout continues up till end of policy term (if age 120 is chosen), if the 1st life assured passes away.

I supposed this means now a person can ass on his annunity plan to his child, for legacy planning, unlike most current plan which will terminate in event of death.

Need them to release more info first, but is this a game changer? Any similar products in the market as well?

Is this an ILP?

 

[moejoseph]

Is this an ILP?

Nope is an endowment with legacy planning option. Capital and annual payout are guaranteed

 

[JuniorLion]

Effective XIRR of annuity-esque plans are always around 3-4%. Barely hitting the 4% mark.

 

[justwakeup]

Hi guys,

Checking your opinions, and to find out if there are similar products in the market.

AXA just launched AXA Retire Treasure (II), and if i'm not wrong, from the look of it, a 2nd life assured can be appointed and payout continues up till end of policy term (if age 120 is chosen), if the 1st life assured passes away.

I supposed this means now a person can ass on his annunity plan to his child, for legacy planning, unlike most current plan which will terminate in event of death.

Need them to release more info first, but is this a game changer? Any similar products in the market as well?

Any further info on this thing so that we can assess it further?

 

[justwakeup]

Nope is an endowment with legacy planning option. Capital and annual payout are guaranteed

I go read the product brochure from AXA website, they got mentioned 3.25% and 4.75% investment rate. I know the numbers are FOR ILLUSTRATION PURPOSE, but i think this means it is an ILP? What is the difference btw ILP and endowment???

https://myaxa-singapore.cdn.axa-con...4f407ed_axa+retire+treasure+(ii)+brochure.pdf

Not that I am interested in this product. Just want to know more about these kind of products

 

[BBCWatcher]

I go read the product brochure from AXA website, they got mentioned 3.25% and 4.75% investment rate. I know the numbers are FOR ILLUSTRATION PURPOSE, but i think this means it is an ILP? What is the difference btw ILP and endowment???

I don't think you should get too bogged down on the labels and should really focus on the T&Cs, but, generally speaking:

* An Investment-Linked Plan (ILP) involves your and/or your agent's choices of particular funds and investment products using your premium dollars. (They're of course high cost funds/products.) You might have a modest amount of protection against downside risk, but it's usually pretty weak.

* An endowment plan involves your insurance company's choice of how to manage the funds, consistent with any regulations (one hopes). There's typically stronger protection against downside risk.

Pay absolutely no attention to the projected returns illustration. That's only the highest number that a weak regulator (the Monetary Authority of Singapore) allows insurance companies to use in their illustrations. The guaranteed payout figure is what you should focus on. If future capital market conditions accidentally favor the insurance company's invested funds -- and that's all it'd be, really -- then OK, your insurance company will share a portion of its luck (when that's part of the policy). Of course the insurance company will also keep a big piece of its good luck.

Unfortunately lots of people are naive and pay lots of attention to the marketing "if the sun always shines and the birds always sing" numbers.

Some endowment plans are very simple, fixed deposit-like constructions. And occasionally those are pretty good deals. Singlife's current simple 5 year/2.5% endowment plan is decent, as an example -- if you need to park funds for 5 years, such as saving up for a ~14 year old's university tuition.

 

[moejoseph]

I go read the product brochure from AXA website, they got mentioned 3.25% and 4.75% investment rate. I know the numbers are FOR ILLUSTRATION PURPOSE, but i think this means it is an ILP? What is the difference btw ILP and endowment???

https://myaxa-singapore.cdn.axa-con...4f407ed_axa+retire+treasure+(ii)+brochure.pdf

Not that I am interested in this product. Just want to know more about these kind of products

There are no further info yet as this is quite new, probably need to wait for some bloggers to review it.

The investment insurers stated, are their own investment for participating fund. Regardless of outcome, capital will be guaranteed for endowment. Just that if they perform well, 3.25% - 4.75% non-guaranteed can be given on top of what was guaranteed.

 

[maple96]

I go read the product brochure from AXA website, they got mentioned 3.25% and 4.75% investment rate. I know the numbers are FOR ILLUSTRATION PURPOSE, but i think this means it is an ILP? What is the difference btw ILP and endowment???

https://myaxa-singapore.cdn.axa-con...4f407ed_axa+retire+treasure+(ii)+brochure.pdf

Not that I am interested in this product. Just want to know more about these kind of products

U read the brochure, u should be able to easily identify if it is endowment or ILP.

If it is ILP, they will tell u your premiums will be used to buy some funds like unit trusts. U have to pay upfront fee to buy the units. Depending on how the unit trust perform, your surrender value can fluctuate from positive (profit) to negative (loss). Periodically they will deduct fees from your surrender value. So u could lose all your premiums if the unit trust are invested in equity/bonds/etc when the market crash or go into downtrend, ie capital not guaranteed.

If it is endowment, they will tell u capital guaranteed, returns depend on the performance of the insurer's company funds. They can guarantee a % of annual payout, but u have no guarantee u will earn the projected returns on maturity = for annuity type like endowments.

This one is a annuity type like endowment

 

[maple96]

I bought a single premium endowment 10-11 years ago, maturing end of this year, coming back with 4% pa compounded return, heng ah!

 

[moejoseph]

Updated with illustration

 

[blurpandasg2014]

Updated with illustration

If min payout is 6000$, wont the premiums be sky high for 10yr payment and payout for life? Seems like this product was created and catered to the rich

 

[moejoseph]

If min payout is 6000$, wont the premiums be sky high for 10yr payment and payout for life? Seems like this product was created and catered to the rich

Recommended payment period will be 15 years, at around $1100/mth.

If single premium, it will be around the same as total premium paid for 15 years. But good point will be the policyholder is able to get payout from 6th year onwards. Bad point will be large upfront payment required.

 

[Extech]

Was quoted to pay 1763.08/mth for 25 years. Receive only guaranteed 1500/mth for life. If surrender at age 90, you receive a projected $137,534 back. But if die at 90, DB is $4.5m. Is this worth it?

 

[Bigoya]

One reason I think they're pretty silly is inflation, i.e. they pretend it doesn't exist. There's no guaranteed inflation escalation feature, which is surely something you'd need if you're going to design a product that runs for decades.

The old AXA Retire Happy Plus(?) used to come with an indexation option, aka factor for inflation. And they charge u a higher cost for it without you knowing.

Nothing comes free, the more "attractive" a product looks, the more money it suck in the dark.