Need help with PruSave surrender

[Mr. Wood]

Hopping in here.
I've recently started my investment journey, and after some consideration, I am going to surrender my Pruwealth of 3 years, crossing over to May 2019. 3.25% non-guaranteed is just...zzz..

The surrender value is about half of my paid premiums (monthly). There is an accumulated Reversionary Bonus. Will I get this sum if I surrender my policy?

u can request for revised illustration and see what is the actual surrender value at this point in time

but like what tangent314 said, if u like, can post the illustration stated in policy here for a 2nd opinion.

 

[littleredboy]

What is BI? Is this it?

 

[Zenest]

Let me show you my two similar policies, i.e. Prucash and Income Revosave. Both at sum insured $40k and accumulated coupons.

Prusave - inception 1999, maturing 2020, yearly premium $3744, paid 20 years premium $74880, surrendered value now at $71272. Left one to go and still hadn't broken even.

Prucash. I also have Prusave.

If it is PruCash, I may have good news for you.

While most policies show their nett surrender values under "Surrender Values",
PruCash, it has 2 parts to it due to the annual Cash Benefit feature.

If you surrender your PruCash, the cash values you expect to receive is Surrender Values + Accumulated Cashback Benefits (PruCash has a annual coupon / Cash Benefit component with accrued interest).

If you have been withdrawing your annual Cash Benefit, the "Accumulated Cash Benefit" will reflect as $0, otherwise, it will be the total of annual cash benefit + accrued interest.

To have a clearer picture, you can generate a revised benefit illustration via PruAccess (Pru Customer Login portal). It will show you your projected maturity values taking into account your current cash values. It should be significantly more than your total premium outlay.

I hope i'm right as that means you will expect to received more than what you have expected (fingers crossed).
Do update us if the numbers add up.

 

[Zenest]

What is BI? Is this it?

BI = Benefit Illustration.
Yes, the image you post is part of the BI.

The projected 3.25% & 4.75% investment returns is the referring to the insurers participating (Par) funds average returns per year.
For actual returns experienced by various insurers, you can refer to my earlier post or post in other thread;
https://forums.hardwarezone.com.sg/120382405-post20.html
https://forums.hardwarezone.com.sg/115592959-post356.html

Your returns for your premiums will be lower than the projected par fund returns after expense.
eg. Your nett surrender value at age next birthday 65 is projected at $196,661 (if Pru does an average returns of 4.75%p.a.) with total premium outlay of $76,705.
The yield to you is about 3.67%p.a.

It's a relatively decent product in it's asset class in my opinion.
The principal is guaranteed and you can withdraw in partial or full anytime after 20yrs and before age 100.

If you feel that you can get better average p.a. returns over the next umpteen years with your premiums, then you should consider stopping this plan.
Else, do consider if it can fit into your lower risk basket in your overall wealth accumulation portfolio.

 

[SBC]

If it is PruCash, I may have good news for you.

While most policies show their nett surrender values under "Surrender Values"
For PruCash, it has 2 parts to it due to the annual Cash Benefit feature.

If you surrender your PruCash, the cash values you expect to receive is Surrender Values + Accumulated Cashback Benefits (PruCash has a annual coupon / Cash Benefit component with accrued interest).

If you have been withdrawing your annual Cash Benefit, the "Accumulated Cash Benefit" will reflect as $0, otherwise, it will be the total of annual cash benefit + accrued interest.

To have a clearer picture, you can generate a revised benefit via PruAccess (Pru Customer Login portal). It will show you your projected maturity values taking into account your current cash values. It should be significantly more than your total premium outlay.

I hope i'm right as that means you will expect to received more than what you have expected (fingers crossed).
Do update us if the numbers add up.

Started PruSave in June 2012. Paying $1005 per month.

Surrender value at $35,058 of which $9009 is guaranteed.
I am withdrawing the yearly bonus. Quite siong to maintain this policy.

Need to maintain this policy for another 8 years.

Realized that surrender value is much lower when compared to conversion to another paid out policy. Why huh?
Converted value at 45k.

 

[littleredboy]

Hey thanks for the explanation! Insightful.
But I think the p.a. interest is just...zz.
Capital protected yes, but its the same logic as banks to me, albeit a better return compared.

I agree this type of endowment is very suitable for people who are passive. Its a great product, but not a great product to me.

If you are willing to indulge me, how long does an agent's commission last with this policy? If i surrender, will they get hit with some sort of demerit?

BI = Benefit Illustration.
Yes, the image you post is part of the BI.

The projected 3.25% & 4.75% investment returns is the referring to the insurers participating (Par) funds average returns per year.
For actual returns experienced by various insurers, you can refer to my earlier post or post in other thread;
https://forums.hardwarezone.com.sg/120382405-post20.html
https://forums.hardwarezone.com.sg/115592959-post356.html

Your returns for your premiums will be lower than the projected par fund returns after expense.
eg. Your nett surrender value at age next birthday 65 is projected at $196,661 (if Pru does an average returns of 4.75%p.a.) with total premium outlay of $76,705.
The yield to you is about 3.67%p.a.

It's a relatively decent product in it's asset class in my opinion.
The principal is guaranteed and you can withdraw in partial or full anytime after 20yrs and before age 100.

If you feel that you can get better average p.a. returns over the next umpteen years with your premiums, then you should consider stopping this plan.
Else, do consider if it can fit into your lower risk basket in your overall wealth accumulation portfolio.

 

[Mr. Wood]

https://i.imgur.com/tM7xQPo.jpg[img]

What is BI? Is this it?[/QUOTE]

this is bulls*** product for 20 year commitment. In the worst case (after 20yrs), u get back only capital. even FD 1%pa can easily beat this.

in a normal situation, where this insurer generates 3.25% returns, u will only get back 1.88%~2.48% returns. which is not exactly fantastic.

there are better policies frm other insurer that DARES to state the guaranteed portion will be higher than premiums paid, and thus u will have better overall returns.

for your consideration.

 

[Mr. Wood]

I agree this type of endowment is very suitable for people who are passive. Its a great product, but not a great product to me.

I differ. there are better plans for passive savings or investments.
p***** are one of the worst I seen.

If you are willing to indulge me, how long does an agent's commission last with this policy? If i surrender, will they get hit with some sort of demerit?

https://i.imgur.com/m47t8Kk.jpg[img]
[img]https://i.imgur.com/tM7xQPo.jpg

What is BI? Is this it?

agent commissions varies frm agency to agency.
if u look at yr 2nd img, under effects of deduction. this is the cost which is supposed to be yours but is taken away by insurer for their costs, commissions, overheads, and their office beer tap.
(yes, p**** uses your money on beer tap in office)

but fk care them, they sold u a lousy policy whether they get demerit or not shud be the last of yr concerns. they dun even treat u one beer why u care?

anyway according to my experience, no. unless u r a high networth policy holder, nothing will happen to the agent.

 

[littleredboy]

Thank you, I agree this is not the right product for me. It just doesn't make sense why am I loaning Pru my money at this rate, with a poor return. All policies should have interests guaranteed!

 

[cheongking888]

If it is PruCash, I may have good news for you.

While most policies show their nett surrender values under "Surrender Values",
PruCash, it has 2 parts to it due to the annual Cash Benefit feature.

If you surrender your PruCash, the cash values you expect to receive is Surrender Values + Accumulated Cashback Benefits (PruCash has a annual coupon / Cash Benefit component with accrued interest).

If you have been withdrawing your annual Cash Benefit, the "Accumulated Cash Benefit" will reflect as $0, otherwise, it will be the total of annual cash benefit + accrued interest.

To have a clearer picture, you can generate a revised benefit illustration via PruAccess (Pru Customer Login portal). It will show you your projected maturity values taking into account your current cash values. It should be significantly more than your total premium outlay.

I hope i'm right as that means you will expect to received more than what you have expected (fingers crossed).
Do update us if the numbers add up.

Prucash


Gross Surrender Value : SGD23,397.72


Accumulated CashBack / Cash Benefit (with accrued interest) is SGD48,223.68 (never withdraw since day 1)


Total Surrender Value SGD71,621.40


Yearly premium S$3,744.00


Paid 20 years premium S$74,880.00

 

[justwakeup]

Prucash


Gross Surrender Value : SGD23,397.72


Accumulated CashBack / Cash Benefit (with accrued interest) is SGD48,223.68 (never withdraw since day 1)


Total Surrender Value SGD71,621.40


Yearly premium S$3,744.00


Paid 20 years premium S$74,880.00

Really good news, after 20 yrs lost a little bit nia

 

[littleredboy]

You mean when you finish 20 years, they only pay you back $71k, + cash benefit?
You lost on capital?

Prucash


Gross Surrender Value : SGD23,397.72


Accumulated CashBack / Cash Benefit (with accrued interest) is SGD48,223.68 (never withdraw since day 1)


Total Surrender Value SGD71,621.40


Yearly premium S$3,744.00


Paid 20 years premium S$74,880.00

 

[tangent314]

What is BI? Is this it?

Yep this is the BI.
Assuming you surrender at age 65, you will get about 2.23% on a PAR fund returns of 3.25% and 3.67% in a PAR fund returns of 4.75%.

 

[tangent314]

Prucash
Gross Surrender Value : SGD23,397.72
Accumulated CashBack / Cash Benefit (with accrued interest) is SGD48,223.68 (never withdraw since day 1)
Total Surrender Value SGD71,621.40
Yearly premium S$3,744.00
Paid 20 years premium S$74,880.00

Do you have the maturity value?

 

[mummynew]

Prucash


Gross Surrender Value : SGD23,397.72


Accumulated CashBack / Cash Benefit (with accrued interest) is SGD48,223.68 (never withdraw since day 1)


Total Surrender Value SGD71,621.40


Yearly premium S$3,744.00


Paid 20 years premium S$74,880.00

My brother has a pure endowment policy with GE that seems similar to your numbers. Recently I got him to get his updated numbers:

Policy wef Jul 1997
Endowment 24 years maturing: Jul 2021
Monthly Premium: $295.20 (he doesn't make a lot and so monthly pmt mode fits him)
Total Premium Paid to date for 262 months (about 22 years): $77,300
Current Surrender Value*: $84,500
Updated Maturity Value*: $123,200 (maturity bonus will be 1/3 of accumulated bonus)

*In the 3rd and 6rd year of the policy, he ever taken about $3,000 each time when GE sent him the cheques automatically (think he opted this initially). He happily deposited them and told me about it. I straight away went to get a form for him to instruct all cash backs to be re-deposited. So these surrender and maturity values are a bit distorted by the previous $6,000 taken.

You may want to look at your maturity bonus (I am assuming that Prucash is an endowment product). Some attached 25% and some 33%. Maybe yours is 50%?

For comparison purposes only.

 

[littleredboy]

Thank you everyone for the kind replies. I am smarter now, wished I read ST book when I was younger

 

[tangent314]

Yeah I know that feeling. At least you've found it out pretty early.

 

[cheongking888]

Do you have the maturity value?

Maturity value?


It is all projected. No truth in it.


Anyway, my Prucash just left one year to go. I will let you guys know how much do I get after 21 years.

 

[mummynew]

Thank you everyone for the kind replies. I am smarter now, wished I read ST book when I was younger

My best friend is a financial advisor.

When she was young, she was a 'tied agent', meaning she could only sell insurance products of that particular one company that she represented. She went through company's training that of course would inform the trainees that they had the best products in the market and all went to the field to sell with this belief and confidence.

When you asked about whether terminating your policy will affect your agent, I am assuming this person is a friend of yours. Given my sharing above, perhaps you can understand why a particular product was sold to you when that might be his / her genuine belief that it is the best one (that he / she knows), meaning the said agent had no intention at all to 'con' you. Anyway, my understanding is that the agent will get a demerit point in record and such point may affect his bonus scale.

*My best friend joined an FA firm subsequently when she felt she could not 'bluff' herself to clients that her company had all the best products. She genuinely wants to source for the most appropriate and cost effective products for clients. Her FA weekly trainings are mostly about product comparisons among different insurers. When she did presentation to me, then I can always review similar products from ABCDE and she will explain to me the pros and cons of each, do a recommendation, then for me to decide. So don't lose faith in 'insurance'. There are still reasonable products out there.

 

[littleredboy]

Oh yes haha was it obvious. This policy was sold to me by another friend, whom needed sales to push start his insurance agent career, which coincided with the younger me who needed some sort of savings plan which will grow better than the banks. It was the "best" product he could sell me, with capital protected, and I blame him nothing.
Subsequently, he really could not make it in the industry and exited, with my FA being passed to a mutual friend. Now I'm just worried my friend will get demerits when I surrender this policy in coming beginning of May.

I didn't lose faith in insurance, but I only believe in Term, bought my term when I was only 19. But Life policies? Not again. Endowment? I would advise against. Even regular savings plans you can DIY online, and even get rebates for it.

Thank you for your explanation though, appreciate you spending the time to explain I blame no one for my ignorance in the past. Frankly, I am even considering to buy PRU stocks hehe.