help me evaluate this Manulife retire ready plan

[hygge island]

Was hijacking another thread (retirement vs wealthbuilder) but I thought I should start a new one.

PLs help me evaluate:
I was looking at an AIA retirement saver plan over the past weeks but did not take the offer because I find the IRR of 3.1% (+ rider) too low for a 38 year period plan. Furthermore, ~50% of bonus not guaranteed.
Summary (assuming fund makes 4.75% returns): premium for 23 years (total of $177100), guaranteed bonus (24k at 60yrs, 1k monthly 60-75 yrs old), non guaranteed bonus (117k terminal dividend +77k annual accumulated dividend; paid as lumpsum at 75 yrs old). Best IRR 3.1%, worst IRR 0.1% (assuming only get guaranteed bonus).

Manulife - I might ask agent to tweak the payout period shorter, if possible.
For now, Summary (assuming best case scenario again): Premium for 10 years (total 118500), guaranteed bonus (1k monthly from 60yrs-80yrs), non-guaranteed bonus (33k once at 60yrs old, subsequently $428 monthly along with the guaranteed 1k)
For now, what I like is IRR 4.3% (best case), 2.5% (worst case). And the non-guaranteed bonus is gradually release monthly (vs a lumpsum terminal bonus).

Comments please?

 

[FP_IFA]

What is your status, married, single, age? If single, going to get married? Any dependents? Any kids?

 

[hygge island]

What is your status, married, single, age? If single, going to get married? Any dependents? Any kids?

37 yo, married 2 kids. I have 7k into SA yearly should hit projected 20xx FRS easily, waiting for -ABSD for 2nd property (money set aside already). But nothing in bonds.. don't know how to do it "yet".

 

[FP_IFA]

37 yo, married 2 kids. I have 7k into SA yearly should hit projected 20xx FRS easily, waiting for -ABSD for 2nd property (money set aside already). But nothing in bonds.. don't know how to do it "yet".

Things you should need to know of Manulife RetireReady is:
1. It has a higher payout but it also drains your reserve cash value fast.
2. If you live long enough, there is likely be no cash value left for your dependents should the policy expired or when you passed on.

Now for me who is single and no children, I like the plan:
1. I prefer the higher payout and doesn't need to leave money behind (that might be a concern for someone with family)
2. I like the disability cover where it will double the guaranteed payout if I am disabled. I am single so when I am old, disability instead of death is a bigger concern for me.
3. I like the high guaranteed value.

One word of advice. Don't compromise the payout period too much especially if you have relative healthy parents or grandparents living to a ripe age.

 

[hogrider88]

1. It has a higher payout but it also drains your reserve cash value fast. << meaning??

 

[FP_IFA]

1. It has a higher payout but it also drains your reserve cash value fast. << meaning??

Meaning the payout decreases the cash value of the plan faster than most other retirement plans in the market. After a certain number of years, you will notice there is no more cash value left in the plan. If you die at that point, there is nothing left in the plan for any death payout.

 

[hygge island]

wow, u know these plans very well. Indeed, I checked the death benefits vs other plans, u are right (drains your reserve cash value fast) but this is not so much concern for me as I have other plans for bequest. Would definitely prefer to see the returns come back to me sooner than to risk having issuers suddenly declare a bad year and stop bonuses (i.e. http://www.straitstimes.com/business/invest/make-full-sense-of-insurance-policies ; see comment from Mr Lim about AIA)

 

[neanea]

37 yo, married 2 kids. I have 7k into SA yearly should hit projected 20xx FRS easily, waiting for -ABSD for 2nd property (money set aside already). But nothing in bonds.. don't know how to do it "yet".

How much do you set aside for second property?

 

[life_is_great]

There are 2 very competitive retirement plan in the market now.

One is this Manulife retire ready. The other one is by Tokio Marine..

The yield is slightly higher for TM, but Manulife´s plan has a Loss of independence benefit that TM does not have.

 

[hygge island]

Life is great: thanks, I didn't know that. U evaluated many retirement plans? U agent?

Neanea: enough for OCR condo down payment.

Question to all: what exactly is IRR %? For example Singapore bond is 2.5% yield. If a reirement plan is 4% IRR, can I compare them?

There are 2 very competitive retirement plan in the market now.

One is this Manulife retire ready. The other one is by Tokio Marine..

The yield is slightly higher for TM, but Manulife´s plan has a Loss of independence benefit that TM does not have.

 

[FP_IFA]

Life is great: thanks, I didn't know that. U evaluated many retirement plans? U agent?

Neanea: enough for OCR condo down payment.

Question to all: what exactly is IRR %? For example Singapore bond is 2.5% yield. If a reirement plan is 4% IRR, can I compare them?

Do remember the 4% IRR in the retirement figure whether it is from Manulife, AIA or TM life are non guaranteed. The only figure guaranteed is those in the guaranteed column. Even figures in the 3.25% projection are non-guaranteed.

 

[hygge island]

Hi, I cannot believe it. As I dig further turns out the manulife plan (death benefits) sucks. But I am still not sure if the agent knows what he is saying. Anyone can verify? Total premium paid is roughly 118k. Guaranteed portion is 240k spread monthly and evenly over 20 years (60-80yo). So basic calculation tells u that by first 10years, would receive 120k of guaranteed portion (>premium).
So if U live beyond 80yo, the plan is good. But if one dies between 71-80yo, the payout is 105% of premium minus whatever guaranteed portion already distributed. So basically zero for family. And the plan does not fulfil the 240k guaranteed sum because insured passed away!?

 

[FP_IFA]

Hi, I cannot believe it. As I dig further turns out the manulife plan (death benefits) sucks. But I am still not sure if the agent knows what he is saying. Anyone can verify? Total premium paid is roughly 118k. Guaranteed portion is 240k spread monthly and evenly over 20 years (60-80yo). So basic calculation tells u that by first 10years, would receive 120k of guaranteed portion (>premium).
So if U live beyond 80yo, the plan is good. But if one dies between 71-80yo, the payout is 105% of premium minus whatever guaranteed portion already distributed. So basically zero for family. And the plan does not fulfil the 240k guaranteed sum because insured passed away!?

Yes correct and the worse time to pass away for this plan is right before the payout start because the death benefit is only at 105% of premium + non-guaranteed bonuses (if any).

This plan isn't designed for providing death cover nor bequest. So does the plan now fit into your needs?

 

[hygge island]

Yes correct and the worse time to pass away for this plan is right before the payout start because the death benefit is only at 105% of premium + non-guaranteed bonuses (if any).

This plan isn't designed for providing death cover nor bequest. So does the plan now fit into your needs?

Thanks FP_IFA. I am not exactly concern abt bequest as I have other plans for that (property etc). I can understand if Manulife wants to eat up the non-guaranteed portion if there is death. But I don't like the fact that the plan didn't pay out the guaranteed sum which basically screws up the whole IRR. Singaporeans avg mortality age is ~82 and payout is from 60-80yo. Kinda obvious who will be happy with your passing during your late years.

I wonder how many people would have missed this point and purchased the plan... hiaz...

 

[FP_IFA]

Thanks FP_IFA. I am not exactly concern abt bequest as I have other plans for that (property etc). I can understand if Manulife wants to eat up the non-guaranteed portion if there is death. But I don't like the fact that the plan didn't pay out the guaranteed sum which basically screws up the whole IRR. Singaporeans avg mortality age is ~82 and payout is from 60-80yo. Kinda obvious who will be happy with your passing during your late years.

I wonder how many people would have missed this point and purchased the plan... hiaz...

The final IRR is only applicable if you hold until the policy expiry. It works the same way as a normal endowment plan where the IRR would suffer a big drop if you hold it till maturity.

You want to live long to enjoy the payout. The insurers are the one who suffer if you live long just like CPF Life also don't want us to live too long.

 

[LachesisxD]

To be honest most savings plans aren't really that good. just learn how to do investment and you'll easily make 10%-20% profit yearly. Best of all with certain types of investment you won't have to keep monitoring the stock daily.

 

[revogsx]

a Dbs wealth planner offered me this product last week.

she showed me my low balance portfolio with them and then started to write in scratch paper how good this retireready.
I said the product looks good. Then, she asks for my NRIC card to enroll.

what da?? I said I need time to review and it told her to send me more information like brochure and terms and condition. I want to read some fine print.

weird thing is. her formal offer is written in "scratch paper" ? is this how DBS doing now?

anyway, any peeps here can say that retireready is ok?

 

[akwl88]

a Dbs wealth planner offered me this product last week.

she showed me my low balance portfolio with them and then started to write in scratch paper how good this retireready.
I said the product looks good. Then, she asks for my NRIC card to enroll.

what da?? I said I need time to review and it told her to send me more information like brochure and terms and condition. I want to read some fine print.

weird thing is. her formal offer is written in "scratch paper" ? is this how DBS doing now?

anyway, any peeps here can say that retireready is ok?

when you buy this product, you are actually helping the planner to retire ready

 

[oceanicmanta]

a Dbs wealth planner offered me this product last week.

she showed me my low balance portfolio with them and then started to write in scratch paper how good this retireready.
I said the product looks good. Then, she asks for my NRIC card to enroll.

what da?? I said I need time to review and it told her to send me more information like brochure and terms and condition. I want to read some fine print.

weird thing is. her formal offer is written in "scratch paper" ? is this how DBS doing now?

anyway, any peeps here can say that retireready is ok?

A friend, DBS Private Client, was shown some Universal Life product. Asked me to take a look. I asked for the terms but only hand-written on paper ... what the heck ?!!?

 

[Shepherd Boy]

Some Products Features for you to consider :

AIA Retirement Saver (II)
1. Non-guaranteed annual dividend payout from 1st policy anniversary
2. Guaranteed lump sum equal to 24 times retirement income @ retirement age.
3. Retirement income consist of guaranteed and non-guaranteed.
4. Income payout period of 15 or 20 years

Manulife Retire Ready
1. Guaranteed monthly income
2. Choice of lump Sum non-guaranteed payout at retirement age or to receive it in monthly retirement income.
3. Monthly payout consist of guaranteed and non-guaranteed
4. Income payout period: (i) to age 80, (ii) to age 90, (iii) Lifetime

Aviva Retirement Plus
1. Guaranteed Monthly payout
2. Increasing payout compounded at 3.5% pa
3. Maturity: RB + TB (fully non-guaranteed)
4. Income payout period: 20 years
5. Options for income payouts:
(i) Receive guaranteed retirement payout OR
(ii) Receive a lump sum at the retirement age OR
(iii) partial withdrawal lump sum at the retirement age and receive the remaining as a retirement payout over the income payout phase

AXA Life Retire Happy
1. Guaranteed Yearly payout
2. Retire Happy (Level): level payout
3. Retire Happy (Inflated): increasing payout compounded at 3.5% pa
4. Income payout period of 15 or 20 years