PRUDENTIAL SAVINGS SAGA

[Lewis.T]

That's the ideal scenario but most of the times it doesn't happen. Just like in this case, Prudential used the 3 major financial crises as their argument... his capital where got impervious to negative market changes ? More like the insurer takes most of the upside while sharing with the client the downsides.

The policy he held gave him back his capital that went into the endowment, the endowment portion was $836/yr for 23 years, and he got back $20k. The rest of his premiums were actually on riders to enhance the coverage he got.

 

[akwl88]

Haha chillax guys la

Think i create the ssb vs endowments discussion too extreme liao lol

 

[OngHuatHuat]

Coming May they will declare another round of bonus, so this surrender value may rise a bit.

 

[akwl88]

Coming May they will declare another round of bonus, so this surrender value may rise a bit.

How much premiums have u paid to date?

 

[Perisher]

Coming May they will declare another round of bonus, so this surrender value may rise a bit.

When it works, it's good. And when it doesn't?
Are more than 70% of the policies able to keep up?

Are the common folks willing to risk that to get better returns?

Essentially, are we dismissing the riders as unnecessary thus?

 

[OngHuatHuat]

It is a limited pay whole life. Of course the premium paid so far is larger than the surrender value coz I am only at the 6 th year of policy.

But to my surprise, my return is much better than what I have seen on investing note. That guy lost around 50 or 70 % of what he has paid?
Do you have the link?

How much premiums have u paid to date?

 

[OngHuatHuat]

I just cancel all the riders.
See no point.

When it works, it's good. And when it doesn't?
Are more than 70% of the policies able to keep up?

Are the common folks willing to risk that to get better returns?

Essentially, are we dismissing the riders as unnecessary thus?

 

[akwl88]

It is a limited pay whole life. Of course the premium paid so far is larger than the surrender value coz I am onlye at the 6 th year of policy.

But to my surprise, my return is much better than what I have seen on investing note. That guy lost around 50 or 70 % of what he has paid?
Do you have the link?

Ok la wait till ur policy matured then gpgt again

Which link? 1st page?

 

[Perisher]

It is a limited pay whole life. Of course the premium paid so far is larger than the surrender value coz I am only at the 6 th year of policy.

But to my surprise, my return is much better than what I have seen on investing note. That guy lost around 50 or 70 % of what he has paid?
Do you have the link?

what investing note? Got example to link? Is it endowment plan?

 

[Lewis.T]

I think that's over-complicating things for common folks. Don't you think?
The capital isn't impervious depending upon which plans, some I believe don't cover 100% no?

The ride on the upside can result in 20 years of 0 gain unless you pick the right plan? If you ask the common folks are they willing to sacrifice 20 years and earn nothing vs one which is guaranteed to earn something, I think they would have pick the latter mostly. This is also where most issues came from if you notice. The part where they get nothing after 20 years unless they pick the right plan.

Why can't insurance company put that part in all the first page of their policy with any investment element?

It sure will benefit both sides and cut down any issues no?

The difference you mentioned is just the returns. Basically saying their returns difference with one(endowment) potentially having nothing over 20 years or more while the other(SSB) having the in-between by having guaranteed returns over 10 years.

What other difference is there that makes it so hard to compare?

Do you know what clients really wanted if you put those words up front to them? The bolded parts.

You are missing the protection for the policy term as well, that's why we don't compare the two.

You can also add inexpensive riders like premium waiver riders to the plan, which waives off future premiums upon diagnosis of an early/critical illness.

What if a plan could allow you to save regularly, in small amounts, and also give you protection during the time you save, without having you to worry about market volatility. But when the markets do well you will get a larger slice.

You also do not have to wait till the end of the policy to find out how much you've made, we will declare the amount you have earned yearly, and once we declare it will form part of your guaranteed amount.

At the same time your family will have a small assurance that if something unfortunate happens, there will be a payout of more than what you have saved, and if you were to fall seriously ill, the company will let you enjoy all the benefits of the plan while you can stop paying for it.

All I need is your time investment of 30 mins, while we fill up the paperwork and we'll be done for the next 20 years.

Sounds fantastic doesn't it?


I understand that each benefit is not significant by any means, such as the death benefit, but don't discount the benefits. There are plenty to be found.

 

[akwl88]

Not sure why agents like to term 10,20k as protection

Looks like term coverage is too much?

 

[havetheveryfun]

The policy he held gave him back his capital that went into the endowment, the endowment portion was $836/yr for 23 years, and he got back $20k. The rest of his premiums were actually on riders to enhance the coverage he got.

I know that. You already said it before.

I'm just curious why Prudential didn't use the same explanation as you did in their letter to him ?

In a way, it's like indirectly saying that the returns from the original endowment portion ($836/yr) was expected to be able to have paid for the extra riders, but too bad because the market didn't do well, so your policy did not do as well as expected.

 

[OngHuatHuat]

Nope, it is a post by forever financial freedom on his recent cancellation of WL policy.

Ok la wait till ur policy matured then gpgt again

Which link? 1st page?

 

[OngHuatHuat]

No, it is a whole life plan. I click and read then remember some facts but I forget to save the link. Now dunno how to find. Pretty difficult to follow investing notes post.

what investing note? Got example to link? Is it endowment plan?

 

[OngHuatHuat]

I think they earn a lot from riders.

I know that. You already said it before.

I'm just curious why Prudential didn't use the same explanation as you did in their letter to him ?

In a way, it's like indirectly saying that the returns from the original endowment portion ($836/yr) was expected to be able to have paid for the extra riders, but too bad because the market didn't do well, so your policy did not do as well as expected.

 

[Lewis.T]

I know that. You already said it before.

I'm just curious why Prudential didn't use the same explanation as you did in their letter to him ?

In a way, it's like indirectly saying that the returns from the original endowment portion ($836/yr) was expected to be able to have paid for the extra riders, but too bad because the market didn't do well, so your policy did not do as well as expected.

I have no clue lol. PR needs a replacement maybe

 

[akwl88]

Nope, it is a post by forever financial freedom on his recent cancellation of WL policy.

http://foreverfinancialfreedom.blogspot.sg/2017/04/i-surrendered-my-whole-life-policy-and.html?m=1

Saturday, April 8, 2017
I Surrendered My Whole Life Policy And Lose 80% Of My Capital
I thought this will be a good case study to look back on what I did recently at some point in the future.

I would not call this a mistake that I did because I think the policy has served its purpose for the past 4 years which I no longer needed it anymore. Still, if there is a mistake to point out, it'll be that I'd be better off taking term back then.

Well, time cannot be rewind, so I guess life moves on from here.





My WL Policy

I am not an expert in this insurance area and is/will never be an area that will interest me so I am not comparing my policy to any benchmark or competitors.

My WL policy is a straightforward deal from Prudential multiplier which will cover me a sum assured of $500k upon ceased. This multiplier will be effected until the age of 60 before it will revert back to the original value of $167k.

I chose a 15 year option paying a premium of $543 every month and have been paying them the past 3+ years before I decided to surrender.

I paid a total premium of about $20k approximately during the course of my policy.

Surrender Value

I was informed by an acquaintance in facebook that I can check out alternate 3rd party company that might be willing to buy over my policy.

I checked with purvis capital whether they will be able to offer a higher surrender value but the conclusion is they are not because the duration I have with the policy is too short. Else, usually on average they would be able to buy your policy at a 5% higher than the surrender value you might have with the insurance company.

In the end, I managed to receive a surrender amount of $4k, which sums up to about 20% of the total premium I've paid. The loss is 80% and about $16k in absolute value.

Why Did I Surrender?

This is a personal reason so I am sure there would be people who might disagree with me.

I reviewed my needs and cashflow and decided that my family no longer needs the policy as much as they did should something happened to me today as compared to 3 years ago. The amount of quantum we are talking about is always going to be subjective but we agreed and decided on what is enough.

Someone could argue that the policy can also be a good form of endowment in other uses, i.e if I keep them throughout the full 15 years and redeem them the next 20 years or something. I am not a big fan of endowment myself so that's something not in my plan at all. Still, I think it's worth mentioning that it CAN be useful to particular individual with certain needs so it is wrong to say that they are a total crap.

With more cashflow on my hand, I can have an alternate way to build up my wealth in different aspect which I think can also serve as a form of defense. Like a team of Barcelona, Offense is often a good way of defense. If you cannot defence, score more goals. But I think there needs to be at least some basic defence there and I think I've established that (not going into the details here).

How Do I Feel?

If there were anything to highlight, I think this part would be the most important of the lots.

First, I thought it was important to acknowledge that I have made a mistake buying a WL instead of a term.

Second, it was also important that I put my emotion aside, review my needs and decide on things swiftly. I could have let it dragged on for a few more years before deciding to withdraw and thought it was foolish. I thought it was important to be decisive and not wishy-washy about things. 80% loss, take it with stride and life moves on from there.

There are at least about 5 people in my circle of friends who thought that I would be suffering in this painful loss.

I guess this is the same with why people are frustrated with CPF because they are assuming CPF to be money that they would be depending for future retirement. In wealth building, I think it is prudent and conservative not to include them as part of our retirement strategy. So anything that comes out of it is a bonus, not a privilege.

I don't want to give the impression that thinks that I belittle this amount of money but it is usually part of my conservative ways in building wealth strategy to exclude these particular things in my computation by taking a 100% provision so instead of feeling like a loss, it feels like a gain to me.

Yes, I know it is pretty silly to look at it that way, but my cashflow is actually better this month by $4k because of this.

* Again, this is a disclaimer to highlight that the products do not suit my needs at this point but does not mean it does not suit any individual at any particular point of time. Just need to be clear about that.

 

[Lewis.T]

Thanks for all your sharing btw yyhwin

 

[havetheveryfun]

You are missing the protection for the policy term as well, that's why we don't compare the two.

You can also add inexpensive riders like premium waiver riders to the plan, which waives off future premiums upon diagnosis of an early/critical illness.
Most of these riders can also be purchased separately and individually for around the same price

What if a plan could allow you to save regularly, in small amounts, and also give you protection during the time you save, without having you to worry about market volatility. But when the markets do well you will get a larger slice.
no because no matter how well the markets do, maximum you can get is usually only 3-5%. and because its over 20 years, everything will be evened out most of the time.

You also do not have to wait till the end of the policy to find out how much you've made, we will declare the amount you have earned yearly, and once we declare it will form part of your guaranteed amount.
good, but it appears that this has only been a recent improvement. if not people wouldn't be complaining after 20 years, but already can know how much their policy is worth after a few years

At the same time your family will have a small assurance that if something unfortunate happens, there will be a payout of more than what you have saved, and if you were to fall seriously ill, the company will let you enjoy all the benefits of the plan while you can stop paying for it.
Its just 105% of the premiums you have paid so far unless you have excess riders. like the fall seriously ill part, only by having excess riders will you be able to enjoy such a benefit.

All I need is your time investment of 30 mins, while we fill up the paperwork and we'll be done for the next 20 years.

Sounds fantastic doesn't it?

sounds ok but nothing fantastic

 

[Lewis.T]

Most of these riders can also be purchased separately and individually for around the same price

I don't get what you're saying here, maybe help to rephrase?

no because no matter how well the markets do, maximum you can get is usually only 3-5%. and because its over 20 years, everything will be evened out most of the time.

You know, personally, even though I'm more financially literate than the average bear, I find that to be an ok premise, considering the fact there are other benefits as stated in my post you quoted.

good, but it appears that this has only been a recent improvement. if not people wouldn't be complaining after 20 years, but already can know how much their policy is worth after a few years

I'm not sure when this was implemented so I shall refrain from commenting. But anyway it's a good thing.

Its just 105% of the premiums you have paid so far unless you have excess riders

What's wrong with a little more benefit?