Endownment plan vs SSB

[xtwis7]

You surrender right now it’ll be a 100% loss. Generally it’s not wise to surrender this early unless you really feel that this is not comfortable.

the surrender value is the same

This is my surrender value table

This is my maturity table

That time when I buy this plan is because it is capital gurantee and it do better than normal bank

My plan is GE flexi goal, currently paid for 1 year only, should I continue to treat it as a diversify investment? or should I just end it?

 

[tangent314]

You surrender right now it’ll be a 100% loss. Generally it’s not wise to surrender this early unless you really feel that this is not comfortable.

The decision on whether to surrender or not should not depend on whether or not it will be a 100% loss, which is just applying the sunk cost fallacy. The correct way to evaluate is to consider only future costs and benefits, and that is by calculating the IRR from current surrender value until the end of the policy period.

 

[akwl88]

The non guarantee of 3.25% is it highly possible will achieve?

actually I am quite happy with the 3.25% column if it can achieve that easily

https://www.turtleinvestor.net/surrendering-my-aia-prime-life-policy/

 

[Mecisteus]

You surrender right now it’ll be a 100% loss. Generally it’s not wise to surrender this early unless you really feel that this is not comfortable.

Generally, one shouldn't buy an endowment from year 0.

But if you happen to buy and if you are in the early years, the decision to surrender should be stronger than to hold.

As the policy matures, it becomes a stronger case to hold.

So pick your treshold level.

Remember if you are in year 3 of a 25 years policy, you still need to lock up and hold a lemon policy for at least 2 decades.

2 decades is still a long long time to lock up your money.

 

[Prof. Utonium]

If you include the non guaranteed portions; endowment > SSB.

Recently got myself CPN36 instead of SSB, it offers higher return as compared to SSB in the same duration.

Other than this, my advisor would encourage to avoid such products or anyone else offering it.

lol.

 

[smart_alex]

If you include the non guaranteed portions; endowment > SSB.

Recently got myself CPN36 instead of SSB, it offers higher return as compared to SSB in the same duration.

Other than this, my advisor would encourage to avoid such products or anyone else offering it.

lol.

I hope can at least hit the 3.25% of the non guarantee part, I believe some of the non guarantee return should be able to hit, not all endowment is scam

 

[limster]

If you include the non-guaranteed portion, then you might as well do this

$10k SSB + $10k STI ETF

vs $20k endowment with guaranteed and non-guaranteed portions.

lower cost will easily make the first one a winner.

 

[smart_alex]

if I pay the remaining premium ahead of schedule, will I get more interest in my fund?

 

[jacky5297]

I often think that the “3.25% non-guaranteed return” is just a marketing gimmick.

The reason they do not put it as “20% non-guaranteed return” is such that they are not labelled as Ponzi schemes which promote unrealistic return.

After all, non guarantee means exactly as no guarantee, you show expect this part to be gone, any extra non-guaranteed return is a bonus.

I hope can at least hit the 3.25% of the non guarantee part, I believe some of the non guarantee return should be able to hit, not all endowment is scam

 

[Mecisteus]

if I pay the remaining premium ahead of schedule, will I get more interest in my fund?

That will become a limited premium paying policy.

Insurers would love people to pay more upfront.

But why would you want to do that? The guaranteed premium has to go up substantially higher to make the plan attractive.

 

[tangent314]

There's nothing gimmicky about the non-guaranteed returns thing. The insurers are obliged to project the future value of the plan, and MAS has set a rule that this projection cannot assume more than 4.75% performance of the PAR fund.

If you are going to look only G and ignore the NG portion of the BI, then you are never going to make the correct financial decision, because in all likelihood, the money that you are going to get is going to be a lot closer to the [edited: mixed up NG and G] NG value than the G value.

(This of course only applies to recent BIs, if you look back at BIs from 20 years ago, such regulations weren't in place)

 

[Mecisteus]

There's nothing gimmicky about the non-guaranteed returns thing. The insurers are obliged to project the future value of the plan, and MAS has set a rule that this projection cannot assume more than 4.75% performance of the PAR fund.

If you are going to look only G and ignore the NG portion of the BI, then you are never going to make the correct financial decision, because in all likelihood, the money that you are going to get is going to be a lot closer to the G value than the NG value.

(This of course only applies to recent BIs, if you look back at BIs from 20 years ago, such regulations weren't in place)

1) There are some plans that give higher G. This is the amount that you should be focusing on. But if you like to see higher NG, then good luck in your financial decision.

2) 4.75% is just an adopted and recommended rate when making projections so as to be more realistic.

There is no obligation from insurers that they must meet the NG. And MAS doesn't enforce if insurers pay out less than projections.

Otherwise, NG should become a G.

With effect from 1 July 2013, the LIA has adopted a set of lower investment returns -
4.75% p.a. and 3.25% p.a. – for use in the Benefit Illustrations for Singapore-dollar
denominated Participating (“Par”) policies. This is a reduction from the 5.25% p.a. and
3.75% p.a., which were in use before 1 July 2013.
The set of lower rates used in the illustration reflects the current low interest rate
environment.
These two rates are used purely for illustrative purposes and do not represent upper and lower limits of the investment performance of the Participating (“Par”) Fund. The change in illustration will not affect the actual values of both existing and future Par policies.
The actual returns you can receive from your policy will depend on the actual experience of the Par Fund.

3) In the previous post, there is a reason why I said G has to go up.

Imagine a 25 years policy paying $150 monthly and $45k lumpsum upfront. Both have the same total premiums. How can the G value be the same for both?

 

[JuniorLion]

There's nothing gimmicky about the non-guaranteed returns thing. The insurers are obliged to project the future value of the plan, and MAS has set a rule that this projection cannot assume more than 4.75% performance of the PAR fund.

If you are going to look only G and ignore the NG portion of the BI, then you are never going to make the correct financial decision, because in all likelihood, the money that you are going to get is going to be a lot closer to the G value than the NG value.

(This of course only applies to recent BIs, if you look back at BIs from 20 years ago, such regulations weren't in place)

If you really mean "in all likelihood" (statement in bold), then I can assure you your statement is false. You can only categorically say that if you have an endowment plan and they paid only the G value.

Edit: Realised it was a typo by tangent314.

 

[JuniorLion]

if I pay the remaining premium ahead of schedule, will I get more interest in my fund?

For many insurance companies, they will refund you the extra.

For AIA, you get 0.25% interest on the 'extra premiums' you paid, and they termed it as 'Future Premium Deposit Fund' (FPDF).

 

[tangent314]

If you really mean "in all likelihood" (statement in bold), then I can assure you your statement is false. You can only categorically say that if you have an endowment plan and they paid only the G value.

Sorry, mixed up G and NG, corrected that. You can check my post history, not the first time I've emphasized in this forum that actual value will be closer to NG than G.

 

[JuniorLion]

Sorry, mixed up G and NG, corrected that. You can check my post history, not the first time I've emphasized in this forum that actual value will be closer to NG than G.

All right - sorry was a little harsh, but yes. I do get the point that endowment/insurance plans are not exactly the optimal way to 'grow' your wealth.

 

[smart_alex]

just gotten a quote from AIA agent

that what she quote me for the same premium, same length 25 years. Just sharing

This one is really wtf. 4.75%, get 2.61% only

 

[tangent314]

I'm guessing there's a substantial death benefit that goes with that plan for that kind of returns.

 

[smart_alex]

I'm guessing there's a substantial death benefit that goes with that plan for that kind of returns.

another good reason dun mix insurance with saving!!!

 

[tangent314]

Yeah this one is crap. Dunno why so different from the other one that gives 3.99%