OCBC Universal Lifeplan

[dominion23]

Am being pushed this product by my RM
Is it an endowment plan or ILP?

Can full sum or can borrow against it. sounds very structurally complex.

Any thoughts?

 

[reddevil0728]

Am being pushed this product by my RM
Is it an endowment plan or ILP?

Can full sum or can borrow against it. sounds very structurally complex.

Any thoughts?

Sounds like whole life insurance kind.

can do premium financing

 

[gnooliew]

Universal life plans usually used by HNWIs in wealth planning, which has investment elements as well as wealth preservation elements. Can be collateralized to finance the premium (which are usually quite big) or to get loans for other investments.

 

[boredboiboi]

Am being pushed this product by my RM
Is it an endowment plan or ILP?

Can full sum or can borrow against it. sounds very structurally complex.

Any thoughts?

Its like a single premium wholelife plan but with better return and it only covers death, mainly for legacy. Not investment.
something in the market that might be better if u r interested in such product will be index universal life, which the underlying will be on s&p 500, with lower premium etc.

 

[dominion23]

Its like a single premium wholelife plan but with better return and it only covers death, mainly for legacy. Not investment.
something in the market that might be better if u r interested in such product will be index universal life, which the underlying will be on s&p 500, with lower premium etc.

thanks. Indeed it seems to cover death, which isnt really my main at my mid-late 30s

 

[dominion23]

Universal life plans usually used by HNWIs in wealth planning, which has investment elements as well as wealth preservation elements. Can be collateralized to finance the premium (which are usually quite big) or to get loans for other investments.

Quite confusing as to why it is wealth preservation when it has insurance element, loan element, and also investment element

 

[gnooliew]

Quite confusing as to why it is wealth preservation when it has insurance element, loan element, and also investment element

It's your RM's job to explain the features so that you understand and why it may be suitable for you. If don't understand or not comfortable, better skip.

 

[reddevil0728]

Quite confusing as to why it is wealth preservation when it has insurance element, loan element, and also investment element

Premium financing lor
Essentially is borrowing money to invest

 

[Mephist0pheLes]

basically the bank is dumping the interest rate risk on u through premium financing

 

[reddevil0728]

basically the bank is dumping the interest rate risk on u through premium financing

That’s very myopic way of looking at it.

have you thought about why rich ppl still go for it?

 

[boredboiboi]

thanks. Indeed it seems to cover death, which isnt really my main at my mid-late 30s

Then its something not meant for u unless u want to use it for legacy or probably mortgage(usually not for this)

 

[Mephist0pheLes]

That’s very myopic way of looking at it.

have you thought about why rich ppl still go for it?

They were ill advised?

 

[reddevil0728]

They were ill advised?

And why the rich remain rich and become richer?

very strange right?

ppl here somehow trash the relevance of bankers. But yet rich ppl use bankers all the time.

 

[Mephist0pheLes]

And why the rich remain rich and become richer?

very strange right?

ppl here somehow trash the relevance of bankers. But yet rich ppl use bankers all the time.

are the rich becoming richer bcos of UL? or their income/biz?

are the rich more financially savvy? i hardly think so, otherwise companies like Providend wouldnt exist.

dunno why there is this worshipping of rich that what they do must be rite even if it concerns areas (in this case, financial planning) that may not be expertise of the person.

 

[reddevil0728]

are the rich becoming richer bcos of UL? or their income/biz?

are the rich more financially savvy? i hardly think so, otherwise companies like Providend wouldnt exist.

dunno why there is this worshipping of rich that what they do must be rite even if it concerns areas (in this case, financial planning) that may not be expertise of the person.

I didn’t say they are becoming richer because of UL.

I’m just saying they must be doing something right that result them to be so rich that they don’t have to care about “DIY” and have a banker to do it for them.

while those that are DIY-ing somehow is of the profile where by they are not that rich that they can get a banker or want to get a banker.

a bit strange right?

hence it’s misconception.

 

[dominion23]

I didn’t say they are becoming richer because of UL.

I’m just saying they must be doing something right that result them to be so rich that they don’t have to care about “DIY” and have a banker to do it for them.

while those that are DIY-ing somehow is of the profile where by they are not that rich that they can get a banker or want to get a banker.

a bit strange right?

hence it’s misconception.

they could be rich because they’re super good at a certain industry (eg mining or commodities) but doesn’t mean they know about financial planning. Same as rich people hiring personal trainers. Both bankers or personal trainers can be useful or pointless.

 

[reddevil0728]

they could be rich because they’re super good at a certain industry (eg mining or commodities) but doesn’t mean they know about financial planning. Same as rich people hiring personal trainers. Both bankers or personal trainers can be useful or pointless.

For sure.

The point that is being missed is.

The bankers serve a purpose for such people.

And they still remain rich.

vs those who see no value in bankers but are they anywhere as rich as those who uses them?

or course doesn't apply in all scenarios.

 

[dominion23]

For sure.

The point that is being missed is.

The bankers serve a purpose for such people.

And they still remain rich.

vs those who see no value in bankers but are they anywhere as rich as those who uses them?

or course doesn't apply in all scenarios.

yup indeed they can be useful in some cases.

Back to my question, what is this product exactly?
An insurance against death?
An endowment / savings plan?
An investment product?

a hybrid? Or hedging interest with investment

 

[reddevil0728]

yup indeed they can be useful in some cases.

Back to my question, what is this product exactly?
An insurance against death?
An endowment / savings plan?
An investment product?

a hybrid? Or hedging interest with investment

https://www.investopedia.com/terms/u/universallife.asp

 

[xtwis7]

yup indeed they can be useful in some cases.

Back to my question, what is this product exactly?
An insurance against death?
An endowment / savings plan?
An investment product?

a hybrid? Or hedging interest with investment

It's been associated with a whole life plan for the HNW because there's income requirements to qualify even though most recently GE has removed the $180k/yr income as a pre-requisite. (Anyway OCBC's UL is the same since it's a GE product)

It's somewhat a hybrid whole life with some elements of ILP. UL is traditionally paid as a lump sum up front or with downpayment and the balance through premium financing but the latter is not attractive now since you're paying maybe 4-5% for the financing while the product's yield isn't this high. There have been regular premium UL over a 10-year payment term but in terms of total payment, it's going to be far higher than a single premium upfront.

The purpose of a UL is usually in the form of a legacy which can involve the use of trusts even though term policies can well serve this same purpose. Those who do buy a UL definitely have spare cash because they are less likely to think of the lost opportunity cost that they could have gotten from this large sum of cash paid upfront. Hence it's the lowest possible amount paid for that sum assured instead of paying over 40-50 years.