Help with Flexicash

[Tooi Kono Machi De]

Yar, that's why I'm like wondering whether should I continue or just surrender due to the low guaranteed amount.

Sent from my phone. Duhh .. using GAGT

I personally recommend you hold. Im not an insurance agent. I have a similar plan and my monthly premium is double of yrs

At the end of the day, I dun believe they will eat into the amount you put in. At most you lose to inflation (which is equally wtf). Imaging if news come out that so and so insurance coy participating funds after 25 years cannot even break even/returns worse than regular savings back account returns...the coy sure go bust nobody will buy anything frm there le

 

[Lewis.T]

Yar, that's why I'm like wondering whether should I continue or just surrender due to the low guaranteed amount.

Sent from my phone. Duhh .. using GAGT

Insurance companies do bonus declarations yearly, and after we do so it adds to your guaranteed amount.

 

[Tooi Kono Machi De]

Insurance companies do bonus declarations yearly, and after we do so it adds to your guaranteed amount.

Hi Lewis, Would like to know more about the following explanation you provided from another thread.

Returns for regular premium life sub fund is 0.2% in 2011 after expenses.

Performance for 2005-2014 is 5.2% annualised after investment expenses.

Meaning if one were to get this plan back in 2005, they would get back 5.2% p.a. at the end of the policy?

Nope, this would be how your projected returns are derived. Since projected values are based on 4.75%, you should be getting slightly more than the projected value when you first got the policy.

Projected being the non-guaranteed portion.

Example, cashback grows at a projected 3% for a 4.75% par fund return.

Since the par fund performed at 5.2% over 10 years, you should be getting 3.something% if your plan started and matured during this period.

How come only getting 3.something % when the annualised returns after investment expenses is 5.2%?

 

[Shion]

Insurance companies do bonus declarations yearly, and after we do so it adds to your guaranteed amount.

Yeah...So whether to hold or not is up to individual

For myself, I would still say it is illogical, quoting myself in the bank acct example

 

[squid93]

Alright thanks for the input.
Guess I'll just keep this plan.

Sent from Samsung SAMSUNG GALAXY S5 using GAGT

 

[Takagi]

I also got similar plan from another company, if given a choice again I would not had taken it

Lucky I only agree to commit around $60 per mth but therefore sum assured is sibei low.

So now every coupon I did not take, just accumulate with the plan. Then bonus had been the same for past 5 yrs.

 

[squid93]

I also got similar plan from another company, if given a choice again I would not had taken it

Lucky I only agree to commit around $60 per mth but therefore sum assured is sibei low.

So now every coupon I did not take, just accumulate with the plan. Then bonus had been the same for past 5 yrs.

Same..
If given a choice again, I would not take it.

Sent from Samsung SAMSUNG GALAXY S5 using GAGT

 

[Lewis.T]

Hi Lewis, Would like to know more about the following explanation you provided from another thread.







How come only getting 3.something % when the annualised returns after investment expenses is 5.2%?

Hello, the reason is that insurance is a business model. At the end of the day, it has to be a profitable one for it to be sustainable. They have to pay for staff etc and overheads.

The 3.something% is the projected amount you will be receiving under the 4.75% column, which means that if the company earns 4.75%, we can give you as per projected. (Let me know if you're still unsure about this part)

If you can manage your funds yourself, I strongly recommend you do so to cut on the expenses. For others, concentrating on their job and climbing the ladder is the quickest way for more money.

Edit: I guess I should make it clearer.

Here's a simplified version. When you pay premiums for flexicash, everybody who has bought flexicash has their premiums going to the company.

The company then uses the premiums to do their own investments. As investments are volatile, the company takes part of the returns as a safeguard as most if not all plans have a guaranteed amount that has to be paid regardless of the investment performance. On top of that, they also need to pay for the people to answer the phone regarding your policy or the agents who distribute them, or the claims department etc.

 

[Shion]

But 1 thing I dont understand is why PruFlexiCash the total premiums paid is higher than guaranteed sum, while some other companies are doing the other way round (guaranteed sum on-par with total premiums paid)

Still illogical given that this is supposed to be "savings"

 

[Lewis.T]

I guess it depends on how the actuaries structure the product. We do have capital guaranteed plans too, such as pruwealth, but they are plans without a cashback. Meaning you have no option to withdraw part of your money over the years and will only get the money at the end.

Anyway to the TS, my immediate suggestion without knowing you and your financial liabilities is to hold on to the plan and accumulate the cashback. When you know another good place to park your money or if you need the money for an emergency, you can make use of the accumulated cashback.

 

[Shion]

I guess it depends on how the actuaries structure the product. We do have capital guaranteed plans too, such as pruwealth, but they are plans without a cashback. Meaning you have no option to withdraw part of your money over the years and will only get the money at the end.

But still, if really, one wants that cashback so much, I rather you put your money into the bank savings account. Why pay for a savings plan that has cashback but with distribution costs etc. these unnecessary costs that can be avoided. Or is it because you want more % returns? If so, park your money inside STI ETF.

From my understanding in this PruFlexiCash, even if you never cashback for the next 24 years, your guaranteed is still lower than total premiums paid. This "guaranteed sum" is simply equivalent to your yearly cashback.

Using the bank deposit example. I put in $1 per year, 2nd year onwards I can take out $0.40, if I never take out I should have $25 but the bank can only give me $10 as guaranteed, despite I did not take out any money.

So ultimately, not only it depends on how the actuaries structure the product, it depends on how the agent presents the product. You cannot deny there are people out there who smoke their way through to misled clients. I was a victim to such rubbish many years ago and today, there are 4 insurance companies with I am severely dislike, or I would suggest, to the point of hatred.

Anyway to the TS, my immediate suggestion without knowing you and your financial liabilities is to hold on to the plan and accumulate the cashback. When you know another good place to park your money or if you need the money for an emergency, you can make use of the accumulated cashback.

Once activated, your maturity value will drop. Thats why, never activate it and keep it accumulated.

But if that is the case, park your money inside bank account is logical.

 

[Lewis.T]

Yeah but the cashback grows at 3% until you need to use it. The bank only gives you something lower. If you need to use the money immediately then it makes sense to keep in the bank. If you have too much cash and are not sure what to do with it, a plan like this could work.

Anyway, make the plans suit your goals and wants, not get a plan for the sake of getting one without any rhyme or reason. If you don't have any concrete plans but want to save at higher interest, investments could be but are not the only option. Also, a lot of Singaporeans are holding way too much cash in the bank and are unwilling to invest because of the perceived risks involved.

 

[Shion]

Yeah but the cashback grows at 3% until you need to use it. The bank only gives you something lower. If you need to use the money immediately then it makes sense to keep in the bank. If you have too much cash and are not sure what to do with it, a plan like this could work.

The idea is that, due to the long term period of this plan (25 years), it is very hard to predict whether do you need a certain sum of money at any point of time. Perhaps, someone who has bought a similar plan for many years can do a breakdown on whether is it worth it or not.

I guess it all depends on how we look at it. For example, clients who have no clue what they really need will tend to look at the % returns, and as agents 90% of the time is focused on the % returns as well. But for me personally, the % returns is a secondary factor.

Anyway, make the plans suit your goals and wants, not get a plan for the sake of getting one without any rhyme or reason. If you don't have any concrete plans but want to save at higher interest, investments could be but are not the only option. Also, a lot of Singaporeans are holding way too much cash in the bank and are unwilling to invest because of the perceived risks involved.

I don't find anything wrong with holding cash. It is still liquid asset. Personally, if I had the cash, my 1st choice will be holding it tightly and let inflation kills it, subsequent choice is put inside ETFs.

Maybe some here will think I am siao, why let inflation kills the value of cash.

 

[Lewis.T]

Interesting, have you considered the middle ground? Maybe a fixed deposit or SSB?

 

[Shion]

Interesting, have you considered the middle ground? Maybe a fixed deposit or SSB?

I do have 2 fixed deposits

 

[boob8888]

my monthly premium is about $200, im into my 2nd year and 9th month... thinking of surrendering the policy, any gurus able to advise roughly how much is the surrender value

 

[Shion]

my monthly premium is about $200, im into my 2nd year and 9th month... thinking of surrendering the policy, any gurus able to advise roughly how much is the surrender value

Best is call Prudential directly and ask them ?

Think maybe 1k+ or 2k+...

What does your surrender illustration writes ?

 

[boob8888]

its not indicated in my policy.... im puzzled... im deciding to surrender as i see no point to it

 

[Shion]

its not indicated in my policy.... im puzzled... im deciding to surrender as i see no point to it

Hmm ? You check your benefit illustration, below should have print the surrender values

Anyway, can call Prudential and ask them check for you

 

[Tooi Kono Machi De]

its not indicated in my policy.... im puzzled... im deciding to surrender as i see no point to it

It will be 0.Im at the same stage of the policy as you...