DBS Multipier Plan - Urgent advice needed

[alexsoon1984]

Just bought into the DBS Multipier plan where i qualified under "salary credit into posb a/c" & "credit card spend" + "manulife life (investment-linked) insurance policy".

Was worried about the manulife life insurance policy as i realised its more of investment-linked. In layman term, i contribute XXXX amount of money monthly for 10 years and rewarded for 3-4% compounded interest earning. Penalty if withdrawn within 10 year is i will lose 40-60% of whatever i had contributed.

My question here.....how risky is such product and is there any capital loss protection? I was sold this product as so-called risk-free saving plan and wish to understand more now so that i be able to decide whether to cancel it since its still within the 14-days cooling period. (just signed ytd so 24-FEB technically count as 1st effective date).

 

[stylechap]

What kind of answer do you want to hear? Lol
Either cancel or you get worried for 10years

 

[alexsoon1984]

What kind of answer do you want to hear? Lol
Either cancel or you get worried for 10years

I just want to know if there any chance i going to suffer capital loss.

 

[cassowary18]

Just cancel. I don't get why people chase insurance that they don't need for Multiplier category. Just start a RSP and rotate every year for the Investment category instead.

 

[alexsoon1984]

Just cancel. I don't get why people chase insurance that they don't need for Multiplier category. Just start a RSP and rotate every year for the Investment category instead.

RSP vs insurance-investment linked - Whats the differences from risk and interest-return perspective?

 

[oceanicmanta]

The first 1-2 years of your Manulife ILP is probably not invested in any sort of investment bcos of commissions / fees etc etc

There r many 'hidden fees" within ILP ... eg) bid offer spread is easily 5%, eg) mortality charges increase exponential with age, eg) monthly/yearly admin fee ... everytime there is a fee deduction, you get hit with 5% spread (insurer will sell your units to pay for the fees)

this 5% spread means that if both RSP & ILP are invested in the same fund, the ILP will always be at least 4% worst off than RSP

RSP u can stop contributing any time, hold on to the units at zero cost, continue to earn dividends. When u sell, the bid-offer is a lot more reasonable "market rate"

The Multiplier Investment category is only for 12 months while the ILP is 10 years ... dont be blinded by short term benefit

 

[iduncheckmail]

If got people blindly sign up for insurance and investment just to clock multiplier cat, means that the account and achieved its desired effect.

 

[stylechap]

If got people blindly sign up for insurance and investment just to clock multiplier cat, means that the account and achieved its desired effect.

Well..there sure are people who think that they spend few hundred more per month to clock additional category is a good deal, same logic applies when the same peeps go shopping

 

[tanjiakpeng]

Cancel within 10yrs and u lose 40-60% of whatever u contributed

That is a big red flag for me already

 

[cassowary18]

RSP vs insurance-investment linked - Whats the differences from risk and interest-return perspective?

The first 1-2 years of your Manulife ILP is probably not invested in any sort of investment bcos of commissions / fees etc etc

There r many 'hidden fees" within ILP ... eg) bid offer spread is easily 5%, eg) mortality charges increase exponential with age, eg) monthly/yearly admin fee ... everytime there is a fee deduction, you get hit with 5% spread (insurer will sell your units to pay for the fees)

this 5% spread means that if both RSP & ILP are invested in the same fund, the ILP will always be at least 4% worst off than RSP

RSP u can stop contributing any time, hold on to the units at zero cost, continue to earn dividends. When u sell, the bid-offer is a lot more reasonable "market rate"

The Multiplier Investment category is only for 12 months while the ILP is 10 years ... dont be blinded by short term benefit

+1.

You know how much hidden costs is in ILP? You put your money in a passively managed ETF and you save all these costs.

 

[tutonic]

I don't understand why people can still be so gullible as to purchase an ILP. There's tons of stories on here already.

 

[tangent314]

Based on the illustration for Manulife SmartWealth II, your value after 10 years of $12000/year premium will be:

$163226 with investment returns of 8% (actual rate of return = 6.67%)
$131168 with investment returns of 4% (actual rate of return = 1.96%)

Now if instead of paying $12k/year into this plan, you use $1000/month to purchase the exact same fund using POSB Invest Saver RSP, your value at the end of 10 years will be:

$181446 with investment returns of 8% (actual rate of return = 7.85%)
$146042 with investment returns of 4% (actual rate of return = 3.84%)

Now can you see how terrible ILPs are?

Of course, you can do even better by purchasing the fund on Poems or DollarDex instead, where you will get the full returns of the fund, i.e. 8% investment returns will give you all 8% and 4% investment returns will give you 4%.

 

[curious_moo]

just cancel first.
if you really want to do force savings (with zero investments), always lookout for the guaranteed amount after xx years. and try to go for shorter term endowment and not high risk ILPs.

of course like what everyone here recommends, ETFs are the better way to go since the returns are probably same or better than most endowments.

 

[alexsoon1984]

Thanks everyone. Now i hate endowment whole life or anything that is whole life to the max.

My losses will be 3k since policy effective back dated to Jan 2020.

mampos,.

 

[radioshack]

I always separate investment from Life& Health Insurance

 

[stylechap]

Well atleast you've wisen up