Etiqa’s ELASTIQ and SAVE3?

[BBCWatcher]

What do you mean not die in 6 years? I read that they will teriminate the policy and return 101%, and assume it no need to wait till the end of 6 years to pay the beneficiaries.

It says “101% of Account value, less any amounts owing to us.” But I think you missed a part: except if death is due to suicide or pre-existing conditions. The latter is quite common. In those cases, the premiums are returned without interest, less any prior payouts and “less any amounts owing to us.”

It depends on how strictly Etiqa wants to interpret its own policy language, but I think you have to assume the worst.

 

[blurpandasg2014]

The initial fee sounds rather ridiculous. Why is there even a fee when there are surrender charges?

 

[tangent314]

I think there's too many hidden costs in this for me to be comfortable choosing this over something like MBH.

 

[BBCWatcher]

I think there's too many hidden costs in this for me to be comfortable choosing this over something like MBH.

SAVE3 will yield 2.X% p.a. (X=high number) (upon surrender) on a 6 year hold, assuming you survive, and it's SDIC protected. That's not a bad offer if you specifically have some big purchase (a university tuition bill in Singapore for example) that's coming up in 6 years, if you want to set aside funds for that known future purchase, and if you are extremely confident you won't touch those dollars.

 

[vince75]

SAVE3 will yield 2.X% p.a. (X=high number) (upon surrender) on a 6 year hold, assuming you survive, and it's SDIC protected. That's not a bad offer if you specifically have some big purchase (a university tuition bill in Singapore for example) that's coming up in 6 years, if you want to set aside funds for that known future purchase, and if you are extremely confident you won't touch those dollars.

This product seems pretty decent if one can hold it for 6 years, probably going to buy a small amount next month. Though not stated in the product notes, the website says customers can enjoy 3% off your first year premium amount for lump sum premium payment.

 

[deepblueli]

This product seems pretty decent if one can hold it for 6 years, probably going to buy a small amount next month. Though not stated in the product notes, the website says customers can enjoy 3% off your first year premium amount for lump sum premium payment.

I just bought some, 3% off first year premium if you pay lump sum is because basically they hold your 2nd year premium. Basically the 3% off is to compensate the lost of interest for the 2nd year premium since you pay it up front. The BI for paying lump sum or two years are the same.

 

[vince75]

I just bought some, 3% off first year premium if you pay lump sum is because basically they hold your 2nd year premium. Basically the 3% off is to compensate the lost of interest for the 2nd year premium since you pay it up front. The BI for paying lump sum or two years are the same.

I see, thanks for the clarification

 

[henrylbh]

SAVE3 will yield 2.X% p.a. (X=high number) (upon surrender) on a 6 year hold, assuming you survive, and it's SDIC protected. That's not a bad offer if you specifically have some big purchase (a university tuition bill in Singapore for example) that's coming up in 6 years, if you want to set aside funds for that known future purchase, and if you are extremely confident you won't touch those dollars.

Yes it's about 2.88xx% compounded annually even without the bonus interest which is not guaranteed, if it's surrendered just after the 6th year for $116,950.

The bonus interest of 0.6% is about $700 giving $117,650 per their brochure and that brings the yield very close to 3%.

But they reserved the right to delay payment up to 6 months

 

[yoongmy]

this is 10 years plan and we should surrender at year 7 (after year 6) to get 3% of the return?

 

[demoforce1]

Where do you see " delay payment up to 6 months"?

 

[BBCWatcher]

this is 10 years plan and we should surrender at year 7 (after year 6) to get 3% of the return?

The SAVE3 plan will run to your age 100 if you let it, but yes, you almost certainly should surrender after the full 6 years have passed. Set a reminder to yourself.

You won’t get 3%, sorry. Ignore Etiqa’s misleading marketing and naming. It’ll be a little less than 3% p.a. due to the upfront 1.2% sales charge. Also, be careful about comparing this to bonds (for example) that pay coupons. All your returns with SAVE3 are paid after surrender, assuming you don’t die before surrender. The Temasek 2.7% bond that was sold last year (2018) pays 2.7%, yes, but in the form of coupons (1.35% of principal) paid to you every 6 months — coupons that you could reinvest to generate additional yield. So a 2.7% coupon paying bond could beat a 2.88% backloaded SAVE3 product depending on how your coupons are reinvested.

Anyway, just be careful drawing comparisons. Etiqa is flashing “3%!!!!” because they know many people will be misled and confused — such obfuscation is legal in Singapore, unfortunately — but it’s really not 3% at all. SAVE3 is merely “OK,” and only if you have a specific planned expense 6 years from now, such as a university tuition bill in Singapore, that you want to save up for.

 

[tangent314]

I did an XIRR check got 2.995%, so I think it does come pretty close to 3% based on the illustration of $50k premium for first 2 years and $117650 surrender value after 6 years.

The 1.2% is only charged on the first of the two premiums, and there is a 0.6% loyalty bonus at the end of the 6 years to offset that.

For single premium if I understand it correctly you pay $98500 to get the same $117650 after 6 years, that comes round to 3.002%

 

[henrylbh]

this is 10 years plan and we should surrender at year 7 (after year 6) to get 3% of the return?

The SAVE3 plan will run to your age 100 if you let it, but yes, you almost certainly should surrender after the full 6 years have passed. Set a reminder to yourself.

You won’t get 3%, sorry. Ignore Etiqa’s misleading marketing and naming. It’ll be a little less than 3% p.a. due to the upfront 1.2% sales charge. Also, be careful about comparing this to bonds (for example) that pay coupons. All your returns with SAVE3 are paid after surrender, assuming you don’t die before surrender. The Temasek 2.7% bond that was sold last year (2018) pays 2.7%, yes, but in the form of coupons (1.35% of principal) paid to you every 6 months — coupons that you could reinvest to generate additional yield. So a 2.7% coupon paying bond could beat a 2.88% backloaded SAVE3 product depending on how your coupons are reinvested.

Anyway, just be careful drawing comparisons. Etiqa is flashing “3%!!!!” because they know many people will be misled and confused — such obfuscation is legal in Singapore, unfortunately — but it’s really not 3% at all. SAVE3 is merely “OK,” and only if you have a specific planned expense 6 years from now, such as a university tuition bill in Singapore, that you want to save up for.

He got wrong notion of SAVE3 and you certainly confused with his question with your own way of looking at it and making uncalled for comparison.

SAVE3 is an ongoing instrument that would mature or terminate close to age 100.

Why surrender or withdraw just after 6 years? Because the interest thereafter is not known and can be zero and there is no withdrawal charge, but has chance of getting loyalty bonus at end of 6th year. The next loyal bonus will on the 12th year and so on ....

If thereafter interest is zero or lower than 3%, then decide whether to stay or exit with no withdrawal charge, compare to the yield of alternative investment.

If thereafter interest is higher, then also decide whether stay or surrender compare to the yield of alternative investment.

 

[henrylbh]

I did an XIRR check got 2.995%, so I think it does come pretty close to 3% based on the illustration of $50k premium for first 2 years and $117650 surrender value after 6 years.

That is if loyal bonus is given. Loyalty bonus of 0.6% on account value at end of 6th policy year is at the discretion of the issuer.

The 1.2% is only charged on the first of the two premiums, and there is a 0.6% loyalty bonus at the end of the 6 years to offset that.

It's only fair to take that into account, if that is likely to be given.

For single premium if I understand it correctly you pay $98500 to get the same $117650 after 6 years, that comes round to 3.002%

3% compounded annually should be based on 98500 (initial account value) and the loyal bonus should be based on account value at end of 6th year.

So can recalculate the yield with and without loyalty bonus?

 

[chinesetcm]

Hi to all,

What does that mean by "Annual premium amount must be in multiples of S$500"? I thought the mini annual premium should be 10k or 20k if we decide to pay in a lump sum?

 

[BBCWatcher]

Why surrender or withdraw just after 6 years? Because the interest thereafter is not known and can be zero and there is no withdrawal charge, but has chance of getting loyalty bonus at end of 6th year. The next loyal bonus will on the 12th year and so on ....

If thereafter interest is zero or lower than 3%, then decide whether to stay or exit with no withdrawal charge, compare to the yield of alternative investment.

Sure, you can make that decision one year at a time. I'm merely pointing out that you most probably would and should surrender the policy after the full 6 years. These funds will be conservatively invested in ways you can replicate reasonably well on your own, and Etiqa is going to have to charge you something for their overheads. It's just not likely to be comparatively attractive in the 7th and subsequent years, with the possible exception of a persistently deflationary environment when you might be happy with a 0% yield and SDIC coverage. (Etiqa assumes that risk, it would appear.)

Said another way, you shouldn't go into SAVE3 with any expectation that you're going to let it ride for more than 6 years. You should assume, with high confidence, that you'll be exiting. This is not something you should view as a medium-term or long-term investment. Treat it as a 6 year fixed deposit with a 2.X% p.a. backloaded yield. And don't die, please. It's a reasonable choice if you're saving for some expense that's coming up 6 years from now, such as a university tuition bill in Singapore.

 

[maple96]

I just bought some, 3% off first year premium if you pay lump sum is because basically they hold your 2nd year premium. Basically the 3% off is to compensate the lost of interest for the 2nd year premium since you pay it up front. The BI for paying lump sum or two years are the same.

Can share the BI? What is the surrender value if u terminate after 6th year?

 

[deepblueli]

Can share the BI? What is the surrender value if u terminate after 6th year?

Worth to note that the interest is reinvested at 3% yearly too.

 

[henrylbh]

Can share the BI? What is the surrender value if u terminate after 6th year?

If just wanna to know the surrender value just after 6th year, refer -

The account value of $117,650 after discretionary loyalty bonus of 0.6%. Without loyalty bonus, the account value is about $116,950.

Surrender value is based on account value at end of 6th year.

The brochure assumes 3% as the prevailing rate after the 6th year.

 

[abkt99]

Is this covered under SDIC?Thanks