PRUDENTIAL SAVINGS SAGA

[koja6049]

http://forums.hardwarezone.com.sg/107352645-post68.html

Not directly defending anything, but this is a true neutral standpoint.

You'll be hard pressed to find people who directly defend endowments that are not agents because most of us haven't gone through a policy lifetime. I have clients who are very happy with their endowments bought way before my time.



If we were more neutral, why don't we post the negatives of STI ETF as well such as in this thread?

http://forums.hardwarezone.com.sg/98862346-post32.html
http://forums.hardwarezone.com.sg/98867476-post35.html
http://forums.hardwarezone.com.sg/98876967-post40.html
http://forums.hardwarezone.com.sg/98884931-post48.html
http://forums.hardwarezone.com.sg/98886415-post49.html
http://forums.hardwarezone.com.sg/98887887-post52.html

For SSB and ETF, we keep harping on the good points. When it comes to endowments suddenly no good points and only talk about the bad? What happened to neutral views?

don't know what's you're harping at. This is a prudential savings saga thread, not STI ETF saga thread. You can open one your own if you feel necessaery

 

[SgUser2277]

I agree, don't be lazy, go and really read product information. Don't let people tell you what is wrong or right, you decide for yourself what suits you. Forums/friends/agents advice listen can already, don't get too sucked into what people say - have your own views.

Most people rely on what friends/relatives/forum says, what agents says and sign up for some plans and don't even know what they have signed up for. When expectations vs reality mismatches years down the road, then finger pointing starts.

 

[akwl88]

as i mentioned many times, do not mix insurance with investment

do not mix protection with returns

these bundled up products serve no purposes to the consumers:

1) inadequate protection

2) inadequate returns

resulting in a half-assed outcome

this saga is a good way to make pple wake up and scrutinize what they have brought/ what they intend to buy/ what is insurance all about

 

[Mecisteus]

And I'm not neutral? Pretty sure if you look through my post history I do recommend investing on their own if a person has the discipline and can take the risks.

In fact I don't recommend any specific plan here because that would constitute marketing. I'm not allowed to. I can only generalize like buy a term, buy a hospitalization plan etc.

On the other hand ETF and SSB advice is spammed all over as the one size fits all solution here.

Just so you know I don't earn anything discussing stuff or posting my findings here.

How can you be neutral? A car salesman advising customers not to buy cars because cars are expensive to maintain?

I don't see anything wrong of multiple posts recommending SSB and ETFs. They are low cost products that are highly recommended.

If these instruments are bought systematically and correctly, they can produce a low cost and effective package which are better or more superior than investment/saving products from insurance companies.

If customers are aware and if they choose insurance products, then by all means. They can go ahead to buy investment/saving products from insurance companies. However, most buyers are not aware of the alternatives.

That is why we are here to recommend the best products. Best in terms of cost effectiveness. Because returns is something that is beyond your control. But cost is something that you can control. Your returns is a function of the underlying and cost.

 

[w1rbelw1nd]

For someone who want a "endowment" like exposure, with only around $500 to invest in a month, how are they supposed to do it? How to invest efficiently the interest/dividends earned?

I think unless we can prove that there is a way to effectively work around these "loose change" reinvestment, endowments may at the very least be a convenient solution to those who have limited capital.

 

[Mecisteus]

For someone who want a "endowment" like exposure, with only around $500 to invest in a month, how are they supposed to do it? How to invest efficiently the interest/dividends earned?

I think unless we can prove that there is a way to effectively work around these "loose change" reinvestment, endowments may at the very least be a convenient solution to those who have limited capital.

Is this a trick question?

 

[w1rbelw1nd]

Is this a trick question?

Honest question, though I know why you would think that way haha.

I personally dont find DIY being a problem for myself as I am pretty hands on, have a strong dislike of STI index /SSB, and have more funds to invest in.

 

[Perisher]

For someone who want a "endowment" like exposure, with only around $500 to invest in a month, how are they supposed to do it? How to invest efficiently the interest/dividends earned?

I think unless we can prove that there is a way to effectively work around these "loose change" reinvestment, endowments may at the very least be a convenient solution to those who have limited capital.

If you wanted all elements like an endowment, how to recommend anything but endowment?

If only $500 to invest, why doesn't SSB or etf/bonds work?

 

[dendii]

Dont quite agree with this.

There are different elements under financial planning which i can advise my clients to buy that are important and will be beneficial to them. Certain plans like endowment (Capital guaranteed at least) is quite subjective to an individual, while others like ILP is a no go.

It is like a car salesman knowing that this car has tons of problems and the new owner will pretty much spend alot of money on repairs and servicing, yet he still sells it.

Can he sell other cars or provide advice on how to maintain, good car lobangs etc? Yes he can.

How can you be neutral? A car salesman advising customers not to buy cars because cars are expensive to maintain?

 

[w1rbelw1nd]

If you wanted all elements like an endowment, how to recommend anything but endowment?

If only $500 to invest, why doesn't SSB or etf/bonds work?

You cant literally get the same % CAGR that is on the SSB website. Note 2.32% is the average interest you get over the years. It is not the same as 2.32% returns CAGR. We got to find a way to reinvest the interest at 2.32% p.a. so that it is a 2.32% returns CAGR.

cannot hate loose change/interest/dividends more if you are specifically investing for long term. Sigh. Where are our zero coupon bonds?

 

[dendii]

The packaging actually serves a purpose for certain riders like CI payout.

In the event of CI, I no longer have to put money into the endowment plan but I still get the sum assured.

Such riders isnt suppose to form a chunk of what you are paying so it won't dilute away your returns that greatly. Not forgetting that the guaranteed value at maturity needs to be higher than what you have put in.

But if the amount you put in vs such riders is a huge percentage, something is very wrong.

And unfortunately, alot agents just add riders to increase the premium, likely resulting in such sagas.

Agree. If they separate it instead of package it together, they won't end up thinking the way they did.

 

[maruikun]

I'm not asking for pay better than SSB. I have a 20 or 30 or 40 year time horizon for example.

They say don't mind but after 20+ years, result is lose money or 0 growth, then you see if they mind?

I think it's best to write it down in black and white and layman's term and emphasize that you say you don't mind earning nothing after 20+ years hor, don't come blame me 20+ years later.

Do you see my point of what clients actually want?

How many 20/30 years does one have? I am not sure about your clients. But trust me I have spoken to my parents and in-laws who have such products. They are the conservative type who uses such product to save money for whatever reason. My in-law ask me how come the returns is not as per projection figures and I have to explain to her the meaning of projection. 20/30 years is a very long period and to commit to such plan and get subpar returns in the end is a shock for the old folks considering the "promise" made to them by the agents. Imagine if the outcome turns out to be losing money like the one in the Facebook post, how do you think they will feel?

I seriously doubt these agents who sold them the policy have informed them such situation can happened and I am not sure what details are being conveyed to consumers. Some of the agents at roadshows still have the cheek to mention their companies have been able to payout consistently as per projected figures. Even my insurance friends also convey such details to me. To sell such product and telling the truth will bear fewer sales to the informed consumer so I can totally understand in agent's context. You may have many clients who are happy with endowment plan. Similarly there may be many clients who are unhappy with the plan.

One forumer mentioned to build trust with clients but how much trust have been breached so far?

 

[Bigoya]

Financial planning by agents almost end up in buying this policy A, buy this policy B. When there may be better alternatives/equal alternatives/less than better alternatives out there which the agent would never tell their clients. Granted sometimes may be just that the agent doesn't know about these other alternatives. How is that considered financial planning ?

what financial planning do they really do?

you don't have hospitalization insurance - get one. help you to calculate how much coverage you need based on your salary, number of family mmbers etc. you don't have life/term insurance - get one. help you to calculate how much coverage you need based on your salary etc. you don't have disability insurance - you need one in case you can't afford to work anymore. help you to calculate how much coverage you need based on the amount of years you estimate you can't work. oh you want to put aside some savings for your future. how much money can you afford to put aside a month? ok, offer you a plan for that sum of money. That's about all the "financial planning" agents mostly do.

That's definitely not financial planning to me, more like insurance planning.

Well... you're not wrong. Generally that's pretty much about it. But look at how many people who doesn't really know how to proportionate their budgets for different stuff? There are people working for a couple of years, good saver, but every month's saving put inside POSB 0.05% account. If they put in OCBC 360 still ok you know.
Come to think of it, I feel sick, I can google my symptoms and find types of cure, Viola! I don't need to see a doctor anymore?

Back to your 1st point, when you see a doctor, almost end up in buying taking drug A, taking drug B. When there may be better alternatives/equal alternatives/less than better alternatives out there which the doctor would never tell their patients. Granted sometimes may be just that the doctor don't have these other alternatives. How is that considered medical consultation?

Now to your last point.
What you have pointed out is absolutely absolutely correct, except that it is neither financial planning or "insurance planning". It is just product selling for god sake.

Like I mentioned, financial planning comes in grades. There can be detailed planning and simple planning. What pure salesmen does are basically just selling. Don't lump them together.

To me, financial planning is to understand the potential financial risks, and working out a sensible amount to insure against. Evaluating between needs and wants, and prioritizing one's cashflow and managing it properly. Ofcos, I take product comparisons seriously too.

This is more than just what you've pointed out.

 

[Bigoya]

Please help us understand why then agents choose to push sub-par products where the capital is non-guaranteed when there are better products like PruWealth around where the capital is guaranteed.

I looked at the product summary for PruWealth and they also use the same 4.75% projected returns, same as a lot of other plans where the guaranteed sum is lesser than the amount of capital put in . http://www.comparefirst.sg/wap/prodSummaryPdf/199002477Z/PRUwealth product summary.pdf

Since PruWealth or other policies project the same returns (4.75%), then obviously the one which guarantees the capital will win hands down everytime right if they are just looking for purely a savings or endowment plan ?

avoided insurance roadshows like the Plague after one got me to sign up for Prucash more than 5 years ago, which I cancelled after 1 year. totally nonsense product

That's why your info is outdated.
Anyway, time changes, sso does product. Don't use some lousy ass 10/20yrs ago product to screw insurance agents today.

#justsaying

 

[limster]

Guess this discussion reappears once in a while, so I will also repost my views.

Such policies, lets call them ILP in general (i.e. something that mixes insurance and investment in an opaque manner), may not be suitable for many people but they are suitable for some.

When you read posts about "my elderly relative was ignorant and so he bought this endowment policy" , you should look on the bright side - at least he bought the policy which is regulated by MAS rather than an unregulated investment like land banking, gold ponzi, wine investment scam, etc etc....

Thats the point isn't it? If your ignorant relative didn't buy this policy, he may well be conned to giving away the money to a scam. At least ILP is not a scam, its just really expensive.

Here at least after 23 years, the TS relative has reached 'breakeven' for the investment portion of his endowment. The 'loss' is the money used to buy 'protection' via the multiple riders -which was useful for a hawker because self-employed need more 'protection' insurance.

Disclaimer: Vested in Pru and Av. Good dividends.

 

[Bigoya]

With regards to this "Prudential Saga", what needs to be done is the PolicyHolder (or the son of that PolicyHolder) needs to sit down, read, think and examine what constitutes their Policy Contract, and to lay down all the collateral that they have and evaluate if they have been any material breach or misrepresentation on the part of the insurer or insurer's representative at that point in time. If they are unable to do that themselves, they need to get help from someone else that can spend the time, effort and energy to do that for them.

Decades ago, endowment was the fashionable financial product/tool, just like BTITR where I=ES3,.... is fashionable now. No one will be able to tell if 2 decades later if the I=ES3,....is the still the correct decision.

Having said above, I do agree the I=ES3,...Vanguard Index ETF....etc....makes sense now.

Financial well-being is personal. Individuals will have to be responsible for their own decisions.

Well said soneat.

with regards to this point though:
"If they are unable to do that themselves, they need to get help from someone else that can spend the time, effort and energy to do that for them."

It is not easy.
There are more salesman then agents in the business who are willing to spend the time and effort without a chance to close a new case.
There are more hoo-haa monkeys that criticize financial plans at first sight than a neutral party like you who really understood the policy wordings.

Even if you volunteered to look into his policy, he might still be skeptical about your intentions.

 

[koja6049]

Guess this discussion reappears once in a while, so I will also repost my views.

Such policies, lets call them ILP in general (i.e. something that mixes insurance and investment in an opaque manner), may not be suitable for many people but they are suitable for some.

When you read posts about "my elderly relative was ignorant and so he bought this endowment policy" , you should look on the bright side - at least he bought the policy which is regulated by MAS rather than an unregulated investment like land banking, gold ponzi, wine investment scam, etc etc....

Thats the point isn't it? If your ignorant relative didn't buy this policy, he may well be conned to giving away the money to a scam. At least ILP is not a scam, its just really expensive.

Here at least after 23 years, the TS relative has reached 'breakeven' for the investment portion of his endowment. The 'loss' is the money used to buy 'protection' via the multiple riders -which was useful for a hawker because self-employed need more 'protection' insurance.

Disclaimer: Vested in Pru and Av. Good dividends.

maybe you should put your disclaimer at the start of your post

 

[Perisher]

You cant literally get the same % CAGR that is on the SSB website. Note 2.32% is the average interest you get over the years. It is not the same as 2.32% returns CAGR. We got to find a way to reinvest the interest at 2.32% p.a. so that it is a 2.32% returns CAGR.

cannot hate loose change/interest/dividends more if you are specifically investing for long term. Sigh. Where are our zero coupon bonds?

Yup but that's not the point. Point is capital protection with growth. If endowment is not better than SSB, what's the point? Not to forget the liquidity of SSB.

Seriously endowment doesn't make much sense to me. What ways exactly is it better than SSB? Slightly higher potential gain with higher potential loss of that gain too? After 20+ years? Most common folks don't want to know their $$ is doing nothing after 20+ years. Not to mention losses.

After such lengthy discussion here, none of the agent can provide a strong case to pick endowment over SSB. A strong advantage, not a potentially.

Or is there anything I missed?

 

[dendii]

There isnt much case to put forth.

In summary, endowments has these benefits

- Higher sum assured in the event of death or CI for family as compared to normal saving
- CI waiver where the insurer will "save for you" instead
- Forced saving

Of the above, are there alot better avenues to do the same? Yes there are. Term + CI is one already one that addresses 1) and 2) in some way.

Hence I feel endowment is only good and suitable for people who have no habit of saving at all. I have friends and clients like this, not many but there still are.

These are the people I know and will ask them to get a capital guaranteed endowment.

Yup but that's not the point. Point is capital protection with growth. If endowment is not better than SSB, what's the point? Not to forget the liquidity of SSB.

Seriously endowment doesn't make much sense to me. What ways exactly is it better than SSB? Slightly higher potential gain with higher potential loss of that gain too? After 20+ years? Most common folks don't want to know their $$ is doing nothing after 20+ years. Not to mention losses.

After such lengthy discussion here, none of the agent can provide a strong case to pick endowment over SSB. A strong advantage, not a potentially.

Or is there anything I missed?

 

[OngHuatHuat]

You miss out on the protection value offered by endowment.

Let say someone signed up for an endowment, the next week he dies, then his family will be able
To get a lot based on what he has already paid.

Ssb wise.... not so. Unless you argue you use interest from Ssb to buy term then perhaps it is a fair comparison. Again, term isn't cheap too for flat fee till 65 years old. A lot of people in this forum has this misconception that term insurance is very very very "cheap", but it isn't that cheap at all. Coz first few years, you still have to pay for the huge expenses for term insurance. I think only 1 or 2 forumer pointed out this before.

Yup but that's not the point. Point is capital protection with growth. If endowment is not better than SSB, what's the point? Not to forget the liquidity of SSB.

Seriously endowment doesn't make much sense to me. What ways exactly is it better than SSB? Slightly higher potential gain with higher potential loss of that gain too? After 20+ years? Most common folks don't want to know their $$ is doing nothing after 20+ years. Not to mention losses.

After such lengthy discussion here, none of the agent can provide a strong case to pick endowment over SSB. A strong advantage, not a potentially.

Or is there anything I missed?