Help with Flexicash

[anfielder]

I think the draw for this plan is that you are covered for term insurance + savings, as from 3rd year onwards can cash out liao.

The conservative types would prefer to let the cashback value roll, whereas people like me would prefer to draw down every year after the 3rd because it forces me to save some cash, rather than dump all my disposable income into the stock market.

Setting aside $ that I can't put into the stock market was one of the considerations for taking up this plan too. I treat this as a low risk, low return part of my portfolio. To me the cashback is something to touch only in the event of a real emergency.

I have an older plan (PruCash, I guess that's the predecessor) that I've held for 12 years.. let me dig the BI out and see how the actual performance compares to that.

 

[Shion]

I think the draw for this plan is that you are covered for term insurance + savings, as from 3rd year onwards can cash out liao.

The conservative types would prefer to let the cashback value roll, whereas people like me would prefer to draw down every year after the 3rd because it forces me to save some cash, rather than dump all my disposable income into the stock market.

PruFlexiCash the term insurance part (death, TPD included ?) is not that high I guess ???

If you look at PruFlexiCash Protection Plus instead, the death benefit is 4 times the sum assured. This "term insurance" expires after 25 years. So here's the thing -- I put the $ into a term insurance covering me death + TPD + CI, isn't that a better choice ? I feel it is the same logic as why we should not mix insurance + investment together, in the case of an ILP.

Another thing is, for the guaranteed sum even if you never cashback at all, it is definitely lower than total premiums paid. Why is that so ? I think it is quite clear the premiums channeled to fund the significantly high "term insurance" portion.

In comparison with similar plans from other insurance companies, that is the difference. Their "term insurance" portion is not that high, and the guaranteed sum will be on-par or roughly the total premiums paid. This is then "closer to a savings plan".

Take for instance TM Nest Egg (GIO cashback) quotation. For this particular plan, even if you cashback for the next 23 years, take the total cashback amount and add into the guaranteed sum at maturity, the figure is in fact on-par with total premiums paid.

Things end up get complicated as many Prudential agents are selling this plan as "a pure savings plan" which is inappropriate.

 

[Shion]

I have an older plan (PruCash, I guess that's the predecessor) that I've held for 12 years.. let me dig the BI out and see how the actual performance compares to that.

PruCash Max Limited Pay ? Or another older plan ?

Thanks for sharing !

 

[anfielder]

PruCash Max Limited Pay ? Or another older plan ?

Thanks for sharing !

PruCash.. not limited pay

Ok, by the end of policy year 12, surrender value in the original BI (based on 5.25% return for the company and 4% interest on the cashback) was $12,801 guaranteed, $5,307 non-guaranteed, total $18,108.

Current (at 12 years + 3 months)
Gross surrender value ($4,311) + accumulated cashback ($14,511) = 18,822.

So I would say, close to what's illustrated in the BI.

I think for this kind of plans they use 4.75% returns and 3% interest on the cashback for illustrations now.. so, even though a large portion of the projected maturity value is non-guaranteed, there's a good chance it will be close to that figure.

 

[Shion]

Yours seems to be an older plan. Thank you for sharing.

Well, the large portion of non-guaranteed sum is not a big issue I feel.

The issue is many agents are selling the 2 PruFlexiCash plans as "pure savings plan", which misleading as their death benefit feature is much higher than a similar plan from another company.

It is more like "savings mixed with short term insurance"

 

[Lewis.T]

Before you stop the plan, what will you be doing with the money?

If you don't need the money urgently (and most of you are not committing a large amount to this plan), wouldn't it be better to just hold onto it?

Don't stop the plan just because it isn't capital guaranteed on paper, we guarantee additional amounts on a yearly basis in the form of bonuses.

 

[Shion]

Before you stop the plan, what will you be doing with the money?

If you don't need the money urgently (and most of you are not committing a large amount to this plan), wouldn't it be better to just hold onto it?

Don't stop the plan just because it isn't capital guaranteed on paper, we guarantee additional amounts on a yearly basis in the form of bonuses.

It all depends on what their agents told them

If the clients were told by their agents that this is a "savings plan", give the agents a call and thrash them upside down, and then proceed to complain the agents to the company. This is never a "savings plan" to begin with.

The next question you should ask yourself is, do you even need that amount of "term insurance portion" ?

Buying a real term insurance gives you better coverage.