Prudential plus 5 year plan

BBCWatcher

BBCWatcher

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All the details are right here. Yes, you can use SRS funds to purchase.

I see at least one drawback, and I think it is a real drawback. Prudential pays a fixed 105% of the premium back if the policyholder dies at any time before the 5 year term ends. That means the 2.0% interest isn’t quite guaranteed. If the policyholder dies quickly, the heirs will do well. (Hint: Buy this plan if you’re on your deathbed, if Prudential lets you, for a quick 5% payoff to your heirs. :D) If the policyholder dies in years 4 or 5 (before term), or even within part of year 3, then the yield is less than 2.0% compounded.

Please note that the government is auctioning a 5 year bond later this month (October, 2017). It’s the last government bond auction for 2017. You can buy the 5 year bond at auction using cash, SRS, or even CPF funds, and it’s a $1,000 minimum instead of $10,000 minimum. I think the 5 year will yield 1.6% for a noncompetitive bid (and you shouldn’t bid competitively), or maybe even 1.7%. If you want a simple, AAA rated sovereign payer (much higher quality than Prudential) — and if you don’t like the “death roulette” aspect of what Prudential is offering — then a simple government bond is another interesting option. Government bonds are also saleable in the secondary market, so you’re not firmly locked into a 5 year term. If you die before bond maturity, your heirs can hold the bond to maturity or not, as they prefer.
 
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oceanicmanta

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good point on the drawback

wonder if recent similar offers from other insurers (eg GE, FWD, LIA) would also have this issue ?

I know some of my endowments / limited pay plans also has this feature ie 105% death benefit. Need to read the contract wordings for those.
 
BBCWatcher

BBCWatcher

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Singapore Savings Bonds (SSBs) are another option, of course.

Prudential’s endowment plan is somewhat interesting, though. By the way, I think it (and similar plans) might have some foreign tax advantages, for those of you subject to taxation outside Singapore in some way. You’d have to research that point very carefully before leaping, of course. For example, if you’re planning to work overseas for a couple years and will return home to Singapore before this endowment plan matures, then you might legally avoid some foreign taxation. The foreign tax authority might not view any aspect of this endowment plan as income until maturity (or premature withdrawal, but don’t do that). No income, no income tax. And since it’s a life insurance product (barely), it might not qualify as taxable wealth in countries with wealth taxes. It may or may not qualify as a reportable account in those jurisdictions where foreign assets must be reported (whether or not they are taxed) — again, a point that must be researched carefully. Anyway, in short, I could see some foreign tax advantages in certain jurisdictions.
 
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xiaowee

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I've already set up by SRS account with DBS. Do I contact DBS or do I contact Prudential if I want to use SRS to buy this? Thanks!
 
Shion

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If Prudential shorten the time to 2 or 3 years, I may consider it
 
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