Need some advice for PRUflexicash

[jmoomoo]

ha, i guessed i agreed with your last sentence "you would rather lose to inflation, than to have chances of losing any part of your capital in terms of absolute amount".

At this present of moment, i can say i'm very contradicting. I do admit that low risk is still a risk. But the non-guarantee portion takes 21k out of my total premium paid which it's in the non-guarantee zone thats what i felt uneasy about.

when you said "there is no sure-win investment in which you have a chance to make more $, but 0 chance of losing.", but the premium sum that i have paid for won't not be guarantee back isn't it. So it does have chances of losing what I have paid for.

you sound very contradicting.

low risk is still a risk isn't it?
Whether you should continue, you will have to decide for yourself how risk-adverse you are.
Does it make you feel better if people tell you that chances of you not getting back full capital is low ?
There is still also the chance of you not getting the full sum back, isn't it?
Just another way of phrasing it.

Or maybe I sound too pessimistic. Low bonus now, does not mean low bonus in the future, considering the market is bad now, while expecting it to improve in the future.
As indicated on every policy you have signed, past performance is not an indicator of future results

Again, there is no sure-win investment in which you have a chance to make more $, but 0 chance of losing.
If you are really losing sleep over this, and your only movitation is capital-preservation, you should move to FD, or capital-guaranteed plans. But even with capital-guaranteed plans, it will mean that the "profit" you get will be extremely low.. or you may just only get back your capital with $0 gain at maturity.
From what I feel, you would rather lose to inflation, than to have chances of losing any part of your capital in terms of absolute amount.

 

[Micky Neo]

Hi, I wish to highlight that the figure 5.25 and 3.75 is NOT, and NOT the return of your savings. It refer to the performance of the insurance company fund. If the insurer fund manage to perform at 3.75%, you'll get 101 927 which translate into
FV = 101 927 (maturity)
n = 15 (years of policy)
PMT =-5880 (annual premium)
using a financial calculator which is easily available online, input the above figure
set as begin mode (you pay annual premium beginning of yr, not end)
Solve for I and you'll get 1.79%.

I cannot say whether 1.79% is good or bad for 15 yrs savings but at least the consumers should be aware of this and not to think their savings is at 3.75 or 5.25.

If you're planning not to withdraw, should get a regular premium savings plan instead of a anticipated endowment.

Generally, for savings plan, you should get back what you've put in. But that's not the point right. Better off putting some in the bank some in CPF
OA - 2.5%, SA/RA 4%, first 60K additional 1%
Coverage?? The sum assured for endowment is usually small, and coverage should be covered using whole life, ILP or term already.
For anticipated endowment, almost all the major insurers offer this, at least 7-8 companies. So which one offers the best value.

So you have more information now. You should consider if you have sufficient coverage, if you put your funds into other place (eg. 3.5% for CPF, first 20K), how many yrs does it takes to make back the 2K and start to gain, or 15 yrs of feeling regret is not good and just cut off 2K to avoid that.... etc.
Consider all the options available before deciding.

cheers

 

[jmoomoo]

Thanks for your break-down calculation. The value I gave is the most positive if I do not take out any cashback.

Actually if I choose withdraw yearly cashback, the total return is 60,382 which break down to guarantee sum would be 31,625 and non-guarantee is 28,757. I'm able to withdraw 2,875 per year which in 15 years would be 43,125. Is it much worth if I withdraw out yearly ? Based on the projected rate?

Hi, I wish to highlight that the figure 5.25 and 3.75 is NOT, and NOT the return of your savings. It refer to the performance of the insurance company fund. If the insurer fund manage to perform at 3.75%, you'll get 101 927 which translate into
FV = 101 927 (maturity)
n = 15 (years of policy)
PMT =-5880 (annual premium)
using a financial calculator which is easily available online, input the above figure
set as begin mode (you pay annual premium beginning of yr, not end)
Solve for I and you'll get 1.79%.

I cannot say whether 1.79% is good or bad for 15 yrs savings but at least the consumers should be aware of this and not to think their savings is at 3.75 or 5.25.

If you're planning not to withdraw, should get a regular premium savings plan instead of a anticipated endowment.

Generally, for savings plan, you should get back what you've put in. But that's not the point right. Better off putting some in the bank some in CPF
OA - 2.5%, SA/RA 4%, first 60K additional 1%
Coverage?? The sum assured for endowment is usually small, and coverage should be covered using whole life, ILP or term already.
For anticipated endowment, almost all the major insurers offer this, at least 7-8 companies. So which one offers the best value.

So you have more information now. You should consider if you have sufficient coverage, if you put your funds into other place (eg. 3.5% for CPF, first 20K), how many yrs does it takes to make back the 2K and start to gain, or 15 yrs of feeling regret is not good and just cut off 2K to avoid that.... etc.
Consider all the options available before deciding.

cheers

 

[Motherliquor.P]

Sorry, I have made a mistake on the guarantee sum. It should be 69k.
Judging from all the replies I received, there is a chance that I will not get back my full capital even when it is supposed to be an endowment plan which is considered low-risk isn't it?.
However, is it unlikely that prudential will announce the year-end bonus to be 0% ? I saw that in year 2011, prudential announce their bonus at 0.2% which is very low..
In this case, should I forgo my 4 months of savings and terminate it?

How did you manage to find out the bonus for prudential was 0.2% in 2011?

 

[vincent007]

The 3.75 and 5.25 return are only for illustration purpose. It's not Prudential projected return rate.

 

[Saj.Mahal]

Investment return in 2011 was 0.2%
2010 was 7+%
2012 was 11%

Investment return is not the same as Bonus declaration.

Bonus declaration was significantly higher than the 0.2 you mentioned.

You should clarify what you are thinking before making any rash decisions bro!

 

[wahkao3]

let me provide a more accurate cash flow computation

Effective annual rate = 1.89%

 

[anfielder]

let me provide a more accurate cash flow computation

This doesn't take into consideration the insurance coverage that the policy provides right? I'm sure some of the amount paid goes towards death benefit and riders.

 

[Motherliquor.P]

Investment return in 2011 was 0.2%
2010 was 7+%
2012 was 11%

Investment return is not the same as Bonus declaration.

Bonus declaration was significantly higher than the 0.2 you mentioned.

You should clarify what you are thinking before making any rash decisions bro!

What is the difference between bonus and the illustrated projected returns?

 

[wahkao3]

This doesn't take into consideration the insurance coverage that the policy provides right? I'm sure some of the amount paid goes towards death benefit and riders.

yes it does not
its a valuation based on cash flow best case scenario

 

[simpledom]

Hi,

Just a quick answer to the debates in the post, I believe you just need a simple answer.

1) Firstly, on paper, the Guaranteed portion is indeed lesser than the total amount saved, therefore there is a worry that the plan is not "capital guaranteed". However, based on past precedence, there have been plans that previously grossly undermet the projected illustrations. Therefore, noone can say for sure that you will get back at least whatever you have saved.
However, many a times, agents would claim that it would never happen to their company's plans. There are sufficient precedence in the market like the AIA Financial Guardian, Great Eastern's Endowment that have come up in the news, which really throws caution to the wind.

2) I would suggest you hold on to the plan, unless the amount you are setting aside if a huge amount of your budget, and within the short to medium term, you need the money for something else like a wedding / housing / etc. Because terminating the plan is really painful, and it is potentially very very hard to "make back" the $2000 you potentially will lose.

3) The doubt you have in the plan is worrying, because you either don't trust the agent who sold you the plan, or you have met someone who planted the distrust. I would suggest to sit down, talk objectively with someone who can give you unbiased opinion, and also to hear from all parties involved in order to make an informed choice.

Cheers !

 

[royaloyalz]

Hey all.

I need some advice on PRUflexicash. Recently, my parents, together with my brother and I, went to one of the UOB branches to set up a FD account. When we went into the bank, one of the personal bankers came over and started to sell us this particular product.

After explaining to us for about 2 hours, my parents felt that it was worth it and decided to sign up for it. Of course, vouchers were offered to sweeten up the deal.

The personal banker then advised them to open up the accounts for my bro and I instead, as he says that it is a savings account more suitable for young people.

I was reading through some of the posts on this forum, as well as TKL's blog and so on, and realised that things may not be as what he had explained to us.

Basically, what he said was:

1) It is a regular savings account, where we can choose a term of 15/20/25 years, and the "savings" can be placed into the bank either monthly, quarterly or annually.

2) We can change the amount we choose to "save" 2 times within the policy terms.

3) We can withdraw up to 70% out of the account at any point in time after the 2nd policy year, although 30% has to remain in the account. Of course, if money is withdrawn, interest earned will be significantly lower, so he told us not to draw out if possible, unless there is an emergency.

4) Initially, he did not mention that the 3% interest rate is not guaranteed, but recently after I realised that something wasn't quite right, my parents managed to contact him again and he said that it isn't always 3%, sometimes it may be higher, sometimes lower but they will definitely give at least 2%.

5) He also said that the "savings" will not be touched, and when questioned about what our money will be used for, he said that it will be used for loans, that it was similar to how banks used the money in FDs.

Looking at the other threads on this topic about this product, as well as from Prudential's website regarding PRUflexicash, it would seem that what he explained to us is almost entirely different from what I have read from these sources.

Lucky for us, the free look period is still on, and my parents have set up another meeting with him for him to explain the product to us one more time, with all the proper documents this time so that we can verify what he has told us.

However, regardless of what he says, I think it would be better to seek for a second opinion on this product. I would say that my brother is more of the conservative type, whereas I would prefer to do BTIR, even more so after reading various threads on this forum.

Therefore, any advice would be greatly appreciated!

Thanks for taking the time to read this long post, couldn't really keep it as short as I want

 

[lifeishard]

3% is the interest rate if you redeposit the cashback that you are entitled to on 25th month and yes it is not guaranteed to be 3% always throughout the policy term.

point 3 is pure ********. yes you can withdraw only bonus component value out of the policy without surrendering it totally but it's not confirmed at 70% of your actual surrender value. and surender value in the first place is lower than what you put in.

point one he mentioned you 'save' and saving can be place into bank (giro) is not technically wrong. but...he gives you impression that this is uob product since it's 'placed' into bank,can you ask him if uob will be responsible if anything goes wrong?

answer is no,you deal directly with prudential. uob or him is not legally bound to assist you. you don't pay uob but prudential and prudential pays uob.

point 5 also ******** like point 1,this product is prudential's,not uob's.but well,he's good to come up with such way of repackaging and presentation.

if he is already misleading in parts,can you still trust him as a whole?

 

[chopra]

read your long post. how recent is recent. IIRC, if it is lesser than 2weeks, u can cancel without penalty.

but if there is penalty
- you need to calculate quickly how much is the commission
- the underlyings of the products - in what kind of rsp

if you want to cancel and prudential suck a final hefty commission and u r nt happy... write a complaint letter to uob, cc to MAS big shots (search via .gov.sg registry) - content shld include u are disappointed with the credibility of this local bank, and how uob and prudential collude together in a uob bank to MISLEAD elderly (elderly won't even go to prudential building). it will work.

 

[tiny]

royaloyalz, what is the premium amount per month/year? For how many years?

 

[NiteX2]

Hey all.

I need some advice on PRUflexicash. Recently, my parents, together with my brother and I, went to one of the UOB branches to set up a FD account. When we went into the bank, one of the personal bankers came over and started to sell us this particular product.

After explaining to us for about 2 hours, my parents felt that it was worth it and decided to sign up for it. Of course, vouchers were offered to sweeten up the deal.

The personal banker then advised them to open up the accounts for my bro and I instead, as he says that it is a savings account more suitable for young people.

I was reading through some of the posts on this forum, as well as TKL's blog and so on, and realised that things may not be as what he had explained to us.

Basically, what he said was:

1) It is a regular savings account, where we can choose a term of 15/20/25 years, and the "savings" can be placed into the bank either monthly, quarterly or annually.

2) We can change the amount we choose to "save" 2 times within the policy terms.

3) We can withdraw up to 70% out of the account at any point in time after the 2nd policy year, although 30% has to remain in the account. Of course, if money is withdrawn, interest earned will be significantly lower, so he told us not to draw out if possible, unless there is an emergency.

4) Initially, he did not mention that the 3% interest rate is not guaranteed, but recently after I realised that something wasn't quite right, my parents managed to contact him again and he said that it isn't always 3%, sometimes it may be higher, sometimes lower but they will definitely give at least 2%.

5) He also said that the "savings" will not be touched, and when questioned about what our money will be used for, he said that it will be used for loans, that it was similar to how banks used the money in FDs.

Looking at the other threads on this topic about this product, as well as from Prudential's website regarding PRUflexicash, it would seem that what he explained to us is almost entirely different from what I have read from these sources.

Lucky for us, the free look period is still on, and my parents have set up another meeting with him for him to explain the product to us one more time, with all the proper documents this time so that we can verify what he has told us.

However, regardless of what he says, I think it would be better to seek for a second opinion on this product. I would say that my brother is more of the conservative type, whereas I would prefer to do BTIR, even more so after reading various threads on this forum.

Therefore, any advice would be greatly appreciated!

Thanks for taking the time to read this long post, couldn't really keep it as short as I want

2) It is not exactly that flexible unless you are talking about changing it within the first few months. If you reduce the amount saved, from let's say $500 to $300, you will lose the $200 you have saved every month previously. It will be taken as partial surrender of your policy.

3) I am pretty sure it is not 70%. Even from the many similar plans I have on my side from different insurers, I have yet to see any that allows cashback of 70%.

I agree with ntucagent that plan wise there is nothing wrong with it, just that whether the person is more into closing the deal asap or really doing a thorough fact find of your parents' needs.

On chopra's comments, there will not be any penalties as long as the policyholder exercises the option to freelook within the 2 weeks after receiving the policy.

 

[kenix14]

Hey all.

I need some advice on PRUflexicash. Recently, my parents, together with my brother and I, went to one of the UOB branches to set up a FD account. When we went into the bank, one of the personal bankers came over and started to sell us this particular product.

After explaining to us for about 2 hours, my parents felt that it was worth it and decided to sign up for it. Of course, vouchers were offered to sweeten up the deal.

The personal banker then advised them to open up the accounts for my bro and I instead, as he says that it is a savings account more suitable for young people.

I was reading through some of the posts on this forum, as well as TKL's blog and so on, and realised that things may not be as what he had explained to us.

Basically, what he said was:

1) It is a regular savings account, where we can choose a term of 15/20/25 years, and the "savings" can be placed into the bank either monthly, quarterly or annually.

2) We can change the amount we choose to "save" 2 times within the policy terms.

3) We can withdraw up to 70% out of the account at any point in time after the 2nd policy year, although 30% has to remain in the account. Of course, if money is withdrawn, interest earned will be significantly lower, so he told us not to draw out if possible, unless there is an emergency.

4) Initially, he did not mention that the 3% interest rate is not guaranteed, but recently after I realised that something wasn't quite right, my parents managed to contact him again and he said that it isn't always 3%, sometimes it may be higher, sometimes lower but they will definitely give at least 2%.

5) He also said that the "savings" will not be touched, and when questioned about what our money will be used for, he said that it will be used for loans, that it was similar to how banks used the money in FDs.

Looking at the other threads on this topic about this product, as well as from Prudential's website regarding PRUflexicash, it would seem that what he explained to us is almost entirely different from what I have read from these sources.

Lucky for us, the free look period is still on, and my parents have set up another meeting with him for him to explain the product to us one more time, with all the proper documents this time so that we can verify what he has told us.

However, regardless of what he says, I think it would be better to seek for a second opinion on this product. I would say that my brother is more of the conservative type, whereas I would prefer to do BTIR, even more so after reading various threads on this forum.

Therefore, any advice would be greatly appreciated!

Thanks for taking the time to read this long post, couldn't really keep it as short as I want

PruFlexiCash is an endownment plan, if you really want to get the plan, I would suggest you to find another person to handle for you as the way he explain the plan to you is quite misleading. For Point 2, it was explained by NiteX2 in the previous post so i shall not elaborate on that. However, regarding point 3, the 70% he was trying to refer to the cashbacks. For E.g., if you decided to save roughly $2400/year, you will be able to withdraw estimated 60% of the amount from the 25th month onwards if you go for the 25 years term. Hence, techincally speaking, you are not able to withdraw up to 70% of what you have saved as there are no cashbacks for the first 2 years. 3% interest is for the cashbacks that you did not withdraw from the 25th month onwards, it is not the interest of the plan.

 

[chopra]

ts said "I would prefer to do BTIR, even more so after reading various threads on this forum."

ntucagent fyi. delete your advertised post, please.

 

[royaloyalz]

Hey guys, thanks a lot for all the replies!

After reading a little bit more about the product, I realised that it is exactly as what you guys have mentioned.

One thing that I am confused about is how the personal banker will profit from selling this product to us. As far as I know, personal bankers are not paid commissions, but maybe they have a sales quota to meet?

Anyways, the way he explained it to us makes it seem as if the product was from UOB.

In fact, now that I recall further, it is only after explaining everything about how it was a "savings plan" to us and confirming that we would be signing up for the product did he mention that Prudential was also offering insurance in addition to this plan, and that our money is not for paying for the insurance, that it was an additional add on benefit to the plan.

Also, by saying recent, I meant on the 3rd of December. Lucky for us, the documents took awhile to process, so it was only approved about 3 days back. My parents have called that banker and he has confirmed that it is still within the Free Look period. We will be going down to the bank tomorrow to cancel the policy.

Hopefully, more people will be aware of this, especially if they have no intentions to tie themselves down with a plan like this. I would have been fine with it if it were truly like the savings plan that he explained to us, but thinking back about it, it should have been too good to be true, getting a pretty decent interest rate as compared to a normal savings account and yet being totally risk free.

I personally think there's nothing wrong with this plan. It's a form of anticipated endowment plan that has been in the market for years.

Issue is how this plan was presented. Is the banker just trying to push sales or really do a thorough fact find and proposed the plan to fulfill your needs?

The banker represented it as a savings plan, kinda like how a RSP works. He says that it is good for retirement planning, especially if you just want to save some money without taking much risk, and yet still be able to at least lessen the effect of inflation.

Never mentioned the word endowment plan at all.

royaloyalz, what is the premium amount per month/year? For how many years?

There are 3 terms, 15/20/25 years. They have a respective premium of $200/$150/$100 per month, though the amounts can be changed after 2 years. Like I said though, he told us that it was savings, and not a premium charged for a policy.

 

[chopra]

many things to write to mas and st. I will do it tonight.

congrats ts.