CPF chats

[pcmdan]

Young man, u obviously dun own any WL policies, so u dunno how it works, how to calculate returns, make financial decisions on that investment, etc.

U dunno what u dunno to make such comments, implying I dunno how to calculate, provide false info about the returns of my WL policies?

U also dunno what contributes/determine return on investments. If u are savvy fund manager, u should know active and smart management of the funds contributes to good returns, and not passive, blindly following some dca methodology into some u think are good investments like etfs/funds over the long term that determines your returns.

Why should I kill the golden goose that lay the golden eggs? I should kill CPF OA first right?

When should I kill the golden goose? I never look at all my policies until the past few years when I need to decide where I should tap my funds from since I no longer need the insurance coverage. Then I chance upon an article by TKL (ex ceo) advising someone that he should kill his WL and the reasons. So I decided to review my policies and do some calculations to see if his reasons are correct. I was shocked my policies are doing so well (per my benchmark) – compound interest of 4-5% pa from start of policy. Recently, I started to look at yearly returns, wow why should I kill the policies giving such good yearly returns which CPF also cannot give?

U doubt my calculations? I can tell u, it is even better than your irr and cagr formula. I use this internet calculator, using “reverse engineering” method, to give me the interest rate. I have deep vested interest to make sure my calculations are correct to make critical financial decisions and financial planning for my future. https://www.calculator.net/interest-calculator.html

I am not here to sell u or convince u that WL is good, I am just sharing my own financial planning, my good luck to be owning such good policies, what u dunno but think u know, etc

If u believe people will teach u the secret to making money, if it works, without any hidden objectives, good luck to u. I am not teaching u the secret, I am sharing some secrets which WL and endowment policy owners dun share about their good fortunes, what is being shared are usually the unfortunate, the losers, the bad and ugly side of it. Good things dun need to share, these are “old timers”, can u repeat their feat?

Hi maples, while your insights are always great to read, i don't agree on the endowment portion at all (of course every man has a different perspective in seeing things). Endowmpent policy owners i know quite a handful who doesn't have good fortunes at all. Computed their cash outflow vs what they got back in the end, worst than CPF SA rate.

As for limited WL policy, i myself is armed with a couple. However, I am curious to find out how to compute the return p.a? I believe you are basing on the following equation

Cash outflow, Bonus Announced, Guaranteed Portion under the policy.

How do you gett 4% p.a./5% p.a.? Or may i check if you are already at the tail-end of the policy? I only held for 7 years, hence till a long way before my guaranteed portion > premium paid to date.


Only on my policy 12th year, will the guaranteed portion > premium paid to date (barring any time value of $ and bonus announced)

Of course, if i extrapolated, everything remains status quo up till the 20th year, my p.a. return is 5.5% guaranteed (including the yearly bonus) and 2.3% guaranteed (excluding the non announced yearly bonus)

If i do it till age 67, excluding bonus, guaranteed is 5.5% p.a (note that I have mischievously included all the riders that are not supposed to be included)

Hence, definitely outweighing SA rate, hence I bought it in the past. but again, it means i have to hold the policy for a very long time

So one may ask, whats the benefit buying a limited WL, saving in CPF (besides the rates) and buying ETF, i would answer them this

Always get a WL whether u like it or not, just go for the amount u are comfortable paying with. Why limited? Cause I don't foresee anyone working till the day u die. Limited cap your outflow during ur career age. Thereafter you can ignore till the day u die.

Next, in the event of unforeseen circumstances, you will get your payout, whereas CPF and ETF, u get back whatever u invested in.

ETF there is a risk on capital depreciation in the event u really need $$ and unable to surrender. Of course, ETF could also bring in lots of capital upside. Hence, only invest once u get your WL first.

 

[pcmdan]

Every year returns are declared, once declared it is guaranteed, so I am sharing surrender values, guaranteed returns of 4-5% compounded. No point talking about non guaranteed at this stage of my policies, I am not interested in what is in the BI.

Only people who own WL knows how it actually works.

Are you sure your BI states that your returns are 4-5% guaranteed?

Pardon my lack of understanding, might have misunderstood. Dont think you are saying your returns are guaranteed at a rate of 4-5% p.a. right?

If so, can share your BI surrender's value?

 

[SBC]

yes very impressive at 4-5% guaranteed. Likely to be very old policies with more generous bonus payout rate.

mine can get 3%+ guaranteed i quite happy liao. There is one insurance coy very quick at cutting project maturity value, I recd two cuts before it matured. Terrible.
Now with covid, policyholders gotto brace for another such letters

Is this insurance coy starting with P?

 

[pcmdan]

yes very impressive at 4-5% guaranteed. Likely to be very old policies with more generous bonus payout rate.

mine can get 3%+ guaranteed i quite happy liao. There is one insurance coy very quick at cutting project maturity value, I recd two cuts before it matured. Terrible.
Now with covid, policyholders gotto brace for another such letters

What!!! they cut? How can like that one? EEEeeeeee

 

[SBC]

@ maple, I am on my late 40’s. I am also holding about 3 good WL policies.
I had broken even less than 10 years. Rather than the common believe that WL needs to take > 15 years to break even.

BTIR is so prominent now with advice of that ex-ceo.

 

[pcmdan]

@ maple, I am on my late 40’s. I am also holding about 3 good WL policies.
I had broken even less than 10 years. Rather than the common believe that WL needs to take > 15 years to break even.

BTIR is so prominent now with advice of that ex-ceo.

so good. i am in my 7th year, still cant break Net outflow still in negative territory. Without the subsequent bonus, could only break in year 2023.

 

[SBC]

To add on my earlier points.

I had believe WL are ideal for kids education fund and our retirement planning.

The total cash value of my polices and kids’ ones are now close to 300k.
Is now a sizeable pool.

I am confident that it will be another 100k in the next 7-8 years time.

 

[oceanicmanta]

Of course, if i extrapolated, everything remains status quo up till the 20th year, my p.a. return is 5.7% guaranteed (including the yearly bonus) and 4.6% guaranteed (excluding the yearly bonus)

If i do it till age 67, excluding bonus, guaranteed is 5.41% p.a (note that I have mischievously included all the riders that are not supposed to be included)

I am jealous ... 4.6% / 5.7%pa guaranteed, including all riders !!

I would hold to maturity !

Why am I not sold these instead

 

[oceanicmanta]

What!!! they cut? How can like that one? EEEeeeeee

From one of my endowments (not WL)

Projected Maturity Value
2007 = 90.5k
2008 = 67.6k (down 25% !!) ok, GFC, I understand
..
..
..
2019 = 78.5k
2020 = 75.3k (down 4%) ... and this is before Covid and when par fund made 12% !! (I know par fund not equal policy return)

not a happy camper

 

[pcmdan]

I am jealous ... 4.6% / 5.7%pa guaranteed, including all riders !!

I would hold to maturity !

Why am I not sold these instead

Sorry i amended a bit. 20th years without bonus (not announced) is 2.27%

with bonus is 5.5%. budden again, i did not factor in interest on interest (on the announced bonuses)... So it should be higher

 

[pcmdan]

From one of my endowments (not WL)

Projected Maturity Value
2007 = 90.5k
2008 = 67.6k (down 25% !!) ok, GFC, I understand
..
..
..
2019 = 78.5k
2020 = 75.3k (down 4%) ... and this is before Covid and when par fund made 12% !! (I know par fund not equal policy return)

not a happy camper

Seems like they did increase when market is better. between 2008 to 2019.

Not a fan of endowment product, since everything is not transparent.

 

[zoneguard]

Young man, u obviously dun own any WL policies, so u dunno how it works, how to calculate returns, make financial decisions on that investment, etc.

Thank you for calling me a young man because I haven't been called that for quite many years. How did you know I don't own any WL. Maybe I do but I wasn't happy with their returns?

U dunno what u dunno to make such comments, implying I dunno how to calculate, provide false info about the returns of my WL policies?

U also dunno what contributes/determine return on investments. If u are savvy fund manager, u should know active and smart management of the funds contributes to good returns, and not passive, blindly following some dca methodology into some u think are good investments like etfs/funds over the long term that determines your returns.

Yes, I don't know what I don't know. But I do know how to calculate return. I didn't know I am a DCA fan though. I do know the insurance on-boarding involves cost (the agent needs to get paid)

U doubt my calculations? I can tell u, it is even better than your irr and cagr formula. I use this internet calculator, using “reverse engineering” method, to give me the interest rate. I have deep vested interest to make sure my calculations are correct to make critical financial decisions and financial planning for my future. https://www.calculator.net/interest-calculator.html

Thank you for crediting me with IRR and CAGR but I don't deserve it. They are commonly used for comparing investment return. I'll leave the discerning readers to take a look at the calculator you linked and see what is the mathematical basis that underpins the calculations.

I'll leave you to continue the interesting discussions on WL.

 

[oceanicmanta]

Seems like they did increase when market is better. between 2008 to 2019.

Not a fan of endowment product, since everything is not transparent.

yes, 4 years increase (2.5% to 6.6%) and still paying premiums.

dont quite understand ... how is Endowment less transparent than say WL or other insurance products with cash value for that matter ? or u r not implying that ?

I think insurance products with cash values are not that transparent, other than the stated guaranteed amounts

 

[pcmdan]

yes, 4 years increase (2.5% to 6.6%) and still paying premiums.

dont quite understand ... how is Endowment less transparent than say WL or other insurance products with cash value for that matter ? or u r not implying that ?

I think insurance products with cash values are not that transparent, other than the stated guaranteed amounts

Personally, WL in any event, u are covered with sum assured.

Endowment I know it functions similar, however if u look at the surrender value, I think the guaranteed is still loss perpetually.

There is not much transparency on what the companies is using the money to invest into.

Insurance companies always say endowment is part savings part protection. Hence it is normal that ur guaranteed is below what u paid. I feel this is ridiculous. If I wan savings, i would go for saving plans and if I wan protection I will go for WL or term life. Why do I need endowment.

Additionally, close friends who have their endowment maturing, told me to compute their IRR, it sucks. Haha

 

[maple96]

Are you sure your BI states that your returns are 4-5% guaranteed?

Pardon my lack of understanding, might have misunderstood. Dont think you are saying your returns are guaranteed at a rate of 4-5% p.a. right?

If so, can share your BI surrender's value?

I am not here to promote or sell WL policies, neither do I have to proof anything here. So long I know I am right in my calculations using the internet calculator and my surrender values (guaranteed) keep increasing at a rate more than CPF RA, I am happy.

Use this calculator https://www.calculator.net/interest-calculator.html, tried and tested with calculations made by tangent (the expert in helping forumers calculate the same for others here using his own formula).

I already said I never look at BI, what is the use/benefit of looking. The most important is the latest guaranteed surrender value I can get if I choose to terminate, which my insurer put in the mthly and annual statement of accounts.

Ok I will continue later, need to run errands.

 

[pcmdan]

I am not here to promote or sell WL policies, neither do I have to proof anything here. So long I know I am right in my calculations using the internet calculator and my surrender values (guaranteed) keep increasing at a rate more than CPF RA, I am happy.

Use this calculator https://www.calculator.net/interest-calculator.html, tried and tested with calculations made by tangent (the expert in helping forumers calculate the same for others here using his own formula).

I already said I never look at BI, what is the use/benefit of looking. The most important is the latest guaranteed surrender value I can get if I choose to terminate, which my insurer put in the mthly and annual statement of accounts.

Ok I will continue later, need to run errands.

Oh no no...I am more concern with 4-5% computation is it because u are at the tail end of the policy.

I used my own calculation since the calculator provided I am not familiar with.

I have computed based on my surrender value as well since I only basing it purely on guaranteed component and not non guaranteed.

Additionally, if u are not going to show anything by merely stating 4-5% p.a at any given time just doesnt make sense and will misled people. Since I just computed mine at year 7th ,no where near positive.

My main intention is just to confirm is it because u are at the tail end..or ur policy is that great that they give u 4-5% or u are also computing based on a long horizon. Whether u are right or not in your computation remains to be seen.

To be Frank, my full time work requires me to compute returns daily. Hence I am relatively good at it.

 

[Squaredot]

From one of my endowments (not WL)

Projected Maturity Value
2007 = 90.5k
2008 = 67.6k (down 25% !!) ok, GFC, I understand
..
..
..
2019 = 78.5k
2020 = 75.3k (down 4%) ... and this is before Covid and when par fund made 12% !! (I know par fund not equal policy return)

not a happy camper

mine have matured in 2017 or 2018... paid the revised cut amount without "upward revision". Sob sway or what

 

[Kaypohji]

WL non guaranteed portions work the same as endowment isn’t it? Always depending on par fund performance to declare the bonus yearly.

If looking for protection, then yes WL works as it has sum assured in the event smth happens like death etc

But if wanting to use WL as an investment vehicle like endowment, they both works the same way I feel

Personally, WL in any event, u are covered with sum assured.

Endowment I know it functions similar, however if u look at the surrender value, I think the guaranteed is still loss perpetually.

There is not much transparency on what the companies is using the money to invest into.

Insurance companies always say endowment is part savings part protection. Hence it is normal that ur guaranteed is below what u paid. I feel this is ridiculous. If I wan savings, i would go for saving plans and if I wan protection I will go for WL or term life. Why do I need endowment.

Additionally, close friends who have their endowment maturing, told me to compute their IRR, it sucks. Haha

 

[Kaypohji]

I was looking to buy a WL plan recently.
I compute the difference in premium that I save with 2.5% return by assuming I put it into smth like cpf oa.
Then I just pick an age that I feel I will pass away, say 85. So I’m comparing sum assured + non guaranteed returns against the returns I would have gotten if I put the extra premiums into smth that earns 2.5% annually compounded.

I realise I’m better off in BTIR.

So if my alternative investment can earn more than 2.5% I will be much even more better off in BTIR.
the only scenario that WL can perform better is that if they announce non guaranteed bonus at the higher range (4.75% of par fund performance) MOST of the time.to me no diff from cpf money have to be stuck into the policy for a long period of time and announced bonus has to be good most of the time when u hold the policy

 

[vsvs24]

My policies – insurer declares bonus every year, it goes to increase the sum assured, I dun usually read or check. I check the mthly and/or annual statement account which shows the sum assured+bonus=new sum assured, surrender value I will get if I surrender anytime, etc. So I just compare surrender value this mth vs last mth, this year vs last year, to make myself happy. Then do some calculations on the % of returns.

Thanks for sharing this Maple. This looks simple enough for me to assess my policies.