private annuities

[BBCWatcher]

You may wish to add China life lifetime income in the list too.

Good catch! Let me do that right away, thanks.

 

[BBCWatcher]

Updated January 22, 2019

Here is the current list of life annuity (a.k.a. longevity insurance) products available in Singapore (in alphabetical order):

Aviva MyLifeIncome
China Life Lifetime Income Plan
CPF LIFE (1)
Etiqa ePREMIER eternity presto
Manulife RetireReady (3)
NTUC Income Guaranteed Life Annuity (2)
Tokio Marine Retirement GIO
Tokio Marine Retirement PaycheckLife

Notes: (1) CPFB is a sovereign agency and clearly offers the best value for money among Singapore dollar denominated life annuities, even before accounting for its unique tax advantages and protections against creditors and court judgments. If available to you, CPF LIFE should be the first and most important part of your life annuity strategy. (2) NTUC Income has withdrawn its Guaranteed Life Annuity for new policyholders, effective November 23, 2018, although some existing NTUC policyholders can exercise their life annuity options to add this policy. (3) With NTUC Income’s departure, Manulife is now the only carrier offering a fully SRS qualified life annuity, meaning that the life annuity can be purchased in a single premium with SRS dollars and, per IRAS rules, effectively extend the 10 year window for tax favored withdrawals.

Some other life insurance companies in Singapore offer term annuities with payouts to advanced ages such as age 99 or age 100, but these are not genuine life annuities. For example, AXA’s Retire Happy Plus with its 3.5%/year escalation feature can approximate/simulate a genuine life annuity if you hold back some of the escalation and reinvest it in safe assets, such as Singapore Savings Bonds and/or CPF deposits. Life annuities are available from offshore insurance carriers (and occasionally from sovereigns if you qualify, through working abroad for example), usually in other currencies (U.S. dollars, euro, yen, Swiss francs, etc.) but very occasionally in Singapore dollars. The offshore private life annuity products are fairly exotic if you have a right of abode in Singapore and plan to retire in Singapore. Offshore life annuities can have stronger, weaker, or similar regulatory and government backstop insurance protections compared to onshore life annuities.

Unfortunately, there is no “perfect” Singapore dollar denominated life annuity product. “Perfect” would mean options for joint/survivor payouts (for a spouse/partner, in particular), inflation-linked guaranteed payouts, and full SRS qualification (to extend the tax favored SRS withdrawal period beyond 10 years in effect). (Joint/survivor terms and full SRS qualification might be mutually exclusive given tax rule limitations.) However, you may be able to combine products and/or CPF LIFE to arrive at a near perfect solution.

 

[foozgarden]

Hi BBC

You may wish to add China life lifetime income in the list too.

does buying from a reputable company count?
seeing it comes from china company. there is always a negative stigma assoc with it.

what if it goes bust midway?

 

[BBCWatcher]

does buying from a reputable company count?

Yes.

seeing it comes from china company. there is always a negative stigma assoc with it.
what if it goes bust midway?

There's some protection offered through the Singapore Deposit Insurance Corporation (SDIC). In the event China Life Insurance (Singapore) Pte. Ltd. were to go bust, SDIC would convert the remaining life annuity payments into a net present value and then pay that amount as a lump sum, up to S$100,000 per policyholder per insurer. That's not a big annuity, though, and there's no guarantee that lump sum will be convertible into a sufficiently attractive, new life annuity. So you should pay attention to the creditworthiness of the insurer, and there's merit in having diversity among high quality life annuities, just as with investments.

I haven't been able to find a separate ratings agency assessment of China Life Insurance (Singapore) Pte. Ltd. (anybody see one?), but for what it's worth its parent company, China Life Insurance (Group) Company, has a pretty solid credit rating with Moody's and Fitch. The parent's rating is on par with Tokio Marine Singapore's. CPF wins this particular contest (it's a AAA-rated sovereign agency), then Manulife (S&P AA-). Aviva Singapore and Etiqa Singapore have lower credit ratings than China Life's parent.

 

[Muneyzmart]

I do not think this should serve a whole life policy since the premiums are relatively similar to the coverage that the policyholder enjoys. I highly doubt there are any policies that pays a guaranteed reasonable income till age 100. If there are, please share with us.

This one is a limited paying Whole Life policy with an option to withdraw coupons.

https://www.aia.com.sg/en/our-products/platinum/aia-platinum-generations.html

 

[moejoseph]

Updated January 22, 2019

Here is the current list of life annuity (a.k.a. longevity insurance) products available in Singapore (in alphabetical order):

Aviva MyLifeIncome
China Life Lifetime Income Plan
CPF LIFE (1)
Etiqa ePREMIER eternity presto
Manulife RetireReady (3)
NTUC Income Guaranteed Life Annuity (2)
Tokio Marine Retirement GIO
Tokio Marine Retirement PaycheckLife

Notes: (1) CPFB is a sovereign agency and clearly offers the best value for money among Singapore dollar denominated life annuities, even before accounting for its unique tax advantages and protections against creditors and court judgments. If available to you, CPF LIFE should be the first and most important part of your life annuity strategy. (2) NTUC Income has withdrawn its Guaranteed Life Annuity for new policyholders, effective November 23, 2018, although some existing NTUC policyholders can exercise their life annuity options to add this policy. (3) With NTUC Income’s departure, Manulife is now the only carrier offering a fully SRS qualified life annuity, meaning that the life annuity can be purchased in a single premium with SRS dollars and, per IRAS rules, effectively extend the 10 year window for tax favored withdrawals.

Some other life insurance companies in Singapore offer term annuities with payouts to advanced ages such as age 99 or age 100, but these are not genuine life annuities. For example, AXA’s Retire Happy Plus with its 3.5%/year escalation feature can approximate/simulate a genuine life annuity if you hold back some of the escalation and reinvest it in safe assets, such as Singapore Savings Bonds and/or CPF deposits. Life annuities are available from offshore insurance carriers (and occasionally from sovereigns if you qualify, through working abroad for example), usually in other currencies (U.S. dollars, euro, yen, Swiss francs, etc.) but very occasionally in Singapore dollars. The offshore private life annuity products are fairly exotic if you have a right of abode in Singapore and plan to retire in Singapore. Offshore life annuities can have stronger, weaker, or similar regulatory and government backstop insurance protections compared to onshore life annuities.

Unfortunately, there is no “perfect” Singapore dollar denominated life annuity product. “Perfect” would mean options for joint/survivor payouts (for a spouse/partner, in particular), inflation-linked guaranteed payouts, and full SRS qualification (to extend the tax favored SRS withdrawal period beyond 10 years in effect). (Joint/survivor terms and full SRS qualification might be mutually exclusive given tax rule limitations.) However, you may be able to combine products and/or CPF LIFE to arrive at a near perfect solution.

Any review on AXA Retire Treasure & AXA Retire Happy Plus as well?

 

[BBCWatcher]

Any review on AXA Retire Treasure & AXA Retire Happy Plus as well?

I've already mentioned AXA Retire Happy Plus. AXA Retire Treasure is technically and maddeningly a term annuity, not a genuine life annuity, but AXA's actuaries got cute and allow a payout term up to age 120. For practical purposes we can probably consider AXA Retire Treasure to be a life annuity, but...AXA, WTF? Were their actuaries sitting in a conference room contemplating scenarios like this one? Good grief, just make it life already!

....Singapore's insurance companies really are a "special" bunch all too often.

I guess AXA is serving one useful purpose: there is obviously a meaningful actuarial difference between ages 99, 100, 120, and life -- or at least they think so. Otherwise they wouldn't have added age 120 to their policy letter for this product. But the only real value an insurance company offers is to assume risk from you then pool it. Here we're talking about longevity risk, so any age limit (which limits the insurance company's risk and increases your risk) is not helpful. But in this rather weakly regulated insurance market our local insurance companies pull these stupid stunts all the time, I'm afraid. Caveat emptor.

 

[blackvice]

Yes.


There's some protection offered through the Singapore Deposit Insurance Corporation (SDIC). In the event China Life Insurance (Singapore) Pte. Ltd. were to go bust, SDIC would convert the remaining life annuity payments into a net present value and then pay that amount as a lump sum, up to S$100,000 per policyholder per insurer. That's not a big annuity, though, and there's no guarantee that lump sum will be convertible into a sufficiently attractive, new life annuity. So you should pay attention to the creditworthiness of the insurer, and there's merit in having diversity among high quality life annuities, just as with investments.

I haven't been able to find a separate ratings agency assessment of China Life Insurance (Singapore) Pte. Ltd. (anybody see one?), but for what it's worth its parent company, China Life Insurance (Group) Company, has a pretty solid credit rating with Moody's and Fitch. The parent's rating is on par with Tokio Marine Singapore's. CPF wins this particular contest (it's a AAA-rated sovereign agency), then Manulife (S&P AA-). Aviva Singapore and Etiqa Singapore have lower credit ratings than China Life's parent.

Yes, to top if off, it's ranked 42 out of fortune global 500 companies in 2018 with assets in billions.

Like any insurance business conducted in SG, the company will need to be registered, regulated and reviewed by MAS.

 

[Mecisteus]

I do not think this should serve a whole life policy since the premiums are relatively similar to the coverage that the policyholder enjoys. I highly doubt there are any policies that pays a guaranteed reasonable income till age 100. If there are, please share with us.

On a 2nd thought, I know this is a private annuity thread.

The definition of an annuity is a plan which pays out a stream of income.

Insurance companies can package a plan and name it all sorts of ways like Limited Paying Whole Life with coupons, Endowment with coupons, Lifetime and Retirement Plans, etc, etc. So the names don't really matter.

The basics are still the same. They take your money in advance, invest your money and pay you for a certain period, till 99 or 100 or lifetime.

Whatever it is, you are correct the plan is an annuity too.

 

[foozgarden]

so whats the best way of looking at annuity?
for the same amount of premium across different plans, the one which pays the highest G amount?
since NG is always a variable.

 

[maple96]

On a 2nd thought, I know this is a private annuity thread.

The definition of an annuity is a plan which pays out a stream of income.

Insurance companies can package a plan and name it all sorts of ways like Limited Paying Whole Life with coupons, Endowment with coupons, Lifetime and Retirement Plans, etc, etc. So the names don't really matter.

The basics are still the same. They take your money in advance, invest your money and pay you for a certain period, till 99 or 100 or lifetime.

Whatever it is, you are correct the plan is an annuity too.

Spot on! they take your money then return back to u in instalments. How much return does it pay? Can the insurer outlive u ? Nothing is guaranteed. Those are the risk u are taking!

Nothing so far can beat CPF Life! If there is, u can use it to opt out of CPF Life!

Nothing beats my WL, paying me 4-5% pa compounded but it does not stream out mthly payouts, only lumpsum payout if I surrender. Neither do I want to convert it into an annuity as I seriously doubt it can pay me 4-5%! So I will continue to pay until 85 (using CPF mthly payouts maybe ), then it becomes paidup WL and continue to enjoy the 4-5% pa. If it no longer pays me high returns or if I need the money then I surrender.

I simply cannot find any pte annuities worth investing at this age.

If u want pte annuities, u have to start really early, the more years it roll, the better will be the return. But bear in mind the risks I highlighted earlier.

 

[maple96]

it always amuses me where people who condemn or shun WL or endowment policies or never buy WL or endowment policies are now looking to buy annuities!

take a look at this one, someone referred to me, u need to have a long enough period to see the growth in returns:

https://www.ocbc.com/personal-banking/insurance/greatlifeendowmentinsurance.html

 

[Mecisteus]

Actually, I'm quite surprised BBC is interested in such plans.

For a person who advocates DIY into low costs index funds, why would someone go and buy an expensive plan that locks up your money for so long but may not generate good returns.

 

[tangent314]

PAR fund policies are not generally not recommended because you can do better with BTIR.

This however doesn't apply to life annuities providing longevity insurance, because apart from CPF Life there are no other alternatives.

(for this purpose, the plans that just keeps the principle and pays you the interest and then returns you the principles upon death don't count as a real life annuity)

 

[Mecisteus]

I simply cannot find any pte annuities worth investing at this age.

If u want pte annuities, u have to start really early, the more years it roll, the better will be the return. But bear in mind the risks I highlighted earlier.

I have looked through the AXA Retire Happy Plus.

The guaranteed return is just above 0%. Inclusive of the NG, probably add another 1 or 2% which is not confirm.

 

[Mecisteus]

PAR fund policies are not generally not recommended because you can do better with BTIR.

This however doesn't apply to life annuities providing longevity insurance, because apart from CPF Life there are no other alternatives.

1) You can always top up your CPF Life under the Basic plan. You are earning up to 6% pa on the top up and paid out as annuity too.

2) If the other typical plans like Endowments and Whole Life are already not generating good returns, how much more those plans that provide a lifelong income? Why would anyone buy a potentially lousy product just because there is no better alternative?

 

[moejoseph]

I have looked through the AXA Retire Happy Plus.

The guaranteed return is just above 0%. Inclusive of the NG, probably add another 1 or 2% which is not confirm.

What is the premium and period that you looked at?

For mine ($15k/year, 15 years), guaranteed is around 1.5%, NG is 3.25% - 4.75% (4.75% based on past records)

 

[Mecisteus]

What is the premium and period that you looked at?

For mine ($15k/year, 15 years), guaranteed is around 1.5%, NG is 3.25% - 4.75% (4.75% based on past records)

I looked at the numbers used in the brochure.

 

[moejoseph]

I looked at the numbers used in the brochure.

I see. If it is the same brochure we are seeing, there's actually a lump sum payout for TPD.

https://www.axa.com.sg/our-solutions/personal/savings-investments/retire-happy

 

[BBCWatcher]

Actually, I'm quite surprised BBC is interested in such plans.

I'm only interested in them (as a general matter) in these cases:

1. Non-citizens and non-PRs who cannot get CPF LIFE. Particularly foreigners who hail from countries that don't offer high quality life annuities.

2. CPF LIFE members who want even more longevity insurance than ERS-level CPF LIFE offers.

3. Individuals who expect to have (or actually have) fat Supplementary Retirement Scheme balances who want to buy a fully SRS qualified life annuity (from Manulife) that helps them save even more on their tax bills.

4. For certain employers, especially small business employers, who'd like to offer their employees an interesting, attractive, and potentially tax advantaged form of compensation: a traditional pension.

For a person who advocates DIY into low costs index funds, why would someone go and buy an expensive plan that locks up your money for so long but may not generate good returns.

I have no problem with "locks up your money for so long" as such. If it's a good deal, that aspect can be perfectly fine. And, speaking up lock ups, where are my invitations to all these fabulous 55th birthday champagne parties everybody is having (that I'm missing) when they withdraw every cent they can from CPF and blow it all on copious amounts of the best champagne?

But ordinary saving and investing is not longevity insurance. There is a very important role for the latter in practically everybody's financial plans. CPF LIFE is the best value longevity insurance on offer in Singapore (and is world class actually), but CPF LIFE isn't necessarily enough, isn't available to everybody, and/or doesn't squeeze more tax savings out of fat SRS accounts that could be quite attractive.