PRUDENTIAL SAVINGS SAGA

[soneat]

after 30yrs, guaranteed cash value is ard 1.1x%

assume par fund return 4.75%, returns can be 4%

Whether its 4% or 3.5% or 3 % or 2.5% is really up to the policy structure as well as insurer's ethics. There's a lot of charges to cover...agent commission, distribution agency commission, insurer mgmt fees, mortality fee. Some insurer has less of these fats but I suspect even the leanest insurer will struggle to meet your 4% requirement, unless of course in certain cases, where there age of the insured is young, then the mortality charges in the initial years are low. 4% projected *maybe* still possible. But if you are looking at 4% guaranteed, then no, WL will never be able to meet your requirement.

I think the "best" under my knowledge and collection is about 2+% Guaranteed.
Policy A: Premium paid=S$14603. Guaranteed cash value over 30 years=S$25800. Project figure is S$51698
Policy B: Premium paid=S$12200. Guaranteed cash value over 30 years=S$22900. Projected figure is S$36818

Not to forget there's also protection cover which is at least 3 to 8 times the total premium paid.

Policy B is already extinct.

 

[soneat]

The term surrender value is use to represent how much money you can receive if you surrender the policy today. Every year the surrender value goes up. It never goes down. This is why WL policies can compared to a bond that declares annual coupon payments.

The above link is talking about something else, which is overoptimistic projected returns which have to be revised downwards. Maybe the projected return was some ridiculous number like 8% whereas the actual figure is lower. (long time ago there may have been less restriction on what sort of projected return you could use to sell policies...)

I looked at the link, he has not bothered to calculate the CAGR of his policy before surrendering.

So instead of considering the actual return, he just surrendered the policy because it didn't meet the "projected returns" instead of analysing whether or not the return was reasonable given current returns on bonds. It may well compare favourably to AAA bond yields... which may make it a fair investment as holding an AAA bond directly would give you a similar return (without the protection element)

On the other hand, more diligent bloggers like investmentmoats has gone through various policies to calculate the CAGR. Shows that there is a difference in quality between various 'financial bloggers'.

Well said. AIA Prime Life was projected based on 6%. I did mentioned ago back in the early 90s, there were no regulations on how BI should be done. This infamous Prime Life in the 1990s has suffered at least 3 rounds of cuts. The insurer was also rather ruthless in how much they cut. Don't to forget that this insurer also dropped their terminal bonus to zero for all the endowments which matured during a certain year during the GFC period.

 

[FP_IFA]

Generally reversionary bonus, once declared, will stay with the policy cash value. So we need to know if the policy bonuses is based on reversionary bonus or terminal bonus or both.

Do understand that rider or any form of insurance are not free. So if you buy an endowment plan contributing $100 per month to it and it has an insurance cover, be assure that part of that $100 will be channeled to the insurance cover. How much is the amount depends on how much cover you buy.

So it is not that your par fund has no return. It is because you have been investing with maybe 90% or 80% of the amount right from the start.

 

[FP_IFA]

http://www.turtleinvestor.net/surrendering-my-aia-prime-life-policy/

At the halfway mark in 2008 when I started working, I began collecting these annual letters as much as I could, and I can see that the projected surrender value was revised downwards.

Year 1997 : $21,385
Year 2008 : $17,544
Year 2010 : $15,718
Year 2012 : $16,448
Year 2016 : $16,449

I will try to explain a bit why the projected surrender value keep dropping in this case.

Right from the start, when the insurer will use the best projection value as the target. Because of that, whenever the insurer doesn't pay out the bonuses for the year or a cut, the projected value will drop.

If the insurer would instead use the guaranteed cash value as a base, then we would see the projected value goes up every year.

 

[bibu00]

What the insurance agents are saying in this thread in,

"Hey hey, too bad you guys bought into Ilp and endowments, sucker.
Don't freak out and sell, make sure your agents get their full share of comms first, after paying all your fees to the company, wait till it "break evens" then sell! "

Feeling hurt now? Who ask you to buy in the first place, look at all your policies now, log in to all your online portal, realise that you can't get your capital back? Heavy penalty for surrendering? Unable to get cheap term insurance now because you wasted so many years on your magic saving plans?

Still living in the believe that "saving plans are a long term commitment, holding it till maturity will yield you tons of money!"?

Ask yourself when you buy an endowment next time, is it worth punishing yourself by putting a chunk of your salary in a magic black hole, where you might not even get your capital back even after 20-30 years?
After a few years, you realise you need the money for something (a car, renovation, passing of loved one) then you have to suck it up and take the 70%loss and surrender your plans.

Limpeh just gonna lim some kopi, go Internet portal click click, surrender my ssb/draw from high interest rate saving account/sell my stock/bond portfolio and laugh.
Heck, I still would have my interest/returns, and my $30 a month 200k coverage term insurance is still going on!

 

[koja6049]

What the insurance agents are saying in this thread in,

"Hey hey, too bad you guys bought into Ilp and endowments, sucker.
Don't freak out and sell, make sure your agents get their full share of comms first, after paying all your fees to the company, wait till it "break evens" then sell! "

Feeling hurt now? Who ask you to buy in the first place, look at all your policies now, log in to all your online portal, realise that you can't get your capital back? Heavy penalty for surrendering? Unable to get cheap term insurance now because you wasted so many years on your magic saving plans?

Still living in the believe that "saving plans are a long term commitment, holding it till maturity will yield you tons of money!"?

Ask yourself when you buy an endowment next time, is it worth punishing yourself by putting a chunk of your salary in a magic black hole, where you might not even get your capital back even after 20-30 years?
After a few years, you realise you need the money for something (a car, renovation, passing of loved one) then you have to suck it up and take the 70%loss and surrender your plans.

Limpeh just gonna lim some kopi, go Internet portal click click, surrender my ssb/draw from high interest rate saving account/sell my stock/bond portfolio and laugh.
Heck, I still would have my interest/returns, and my $30 a month 200k coverage term insurance is still going on!

That's exactly what I'm thinking as well, it's just common sense! I wonder why there is even an argument....

 

[bibu00]

That's exactly what I'm thinking as well, it's just common sense! I wonder why there is even an argument....

Because agents need to feed their family and pump fuel for their car. So white paper also can talk until become black.

 

[akwl88]

seems like lewis gor gor went mia after he never read posb invest saver risk declaration

and he claimed to spent 1 min reading on the website

 

[akwl88]

I will try to explain a bit why the projected surrender value keep dropping in this case.

Right from the start, when the insurer will use the best projection value as the target. Because of that, whenever the insurer doesn't pay out the bonuses for the year or a cut, the projected value will drop.

If the insurer would instead use the guaranteed cash value as a base, then we would see the projected value goes up every year.

i will want consumers to look at guaranteed values only

"projected" and "non-guaranteed" doesn't give peace of mind and allows one to sleep well at night

imagine paying others for "projected" and "non-guaranteed" results

would anyone want that?

 

[FP_IFA]

i will want consumers to look at guaranteed values only

"projected" and "non-guaranteed" doesn't give peace of mind and allows one to sleep well at night

imagine paying others for "projected" and "non-guaranteed" results

would anyone want that?

Yes starting from guaranteed would have been better rather than using projected. Expectation would have been better manage moving forward.

Problem is guaranteed value is always unimpressive and doesn't help the agents closed more sales. So agents focused on projected and we know what happened after that. Expectation pushed up to best projected return and when it don't happen, hell break loose.

 

[akwl88]

Yes starting from guaranteed would have been better rather than using projected. Expectation would have been better manage moving forward.

Problem is guaranteed value is always unimpressive and doesn't help the agents closed more sales. So agents focused on projected and we know what happened after that. Expectation pushed up to best projected return and when it don't happen, hell break loose.

the value is unimpressive because of the wasteful expenses by insurers. think fees, comms, awards ceremonies, incentive trips etc

 

[OngHuatHuat]

Every year my non guaranteed becomes guaranteed, let's see if this year continues.

 

[akwl88]

Every year my non guaranteed becomes guaranteed, let's see if this year continues.

Shld sic the premiums paid also

 

[OngHuatHuat]

I think you have been shifting your goal post.

Your premium for term really so cheap such that you can simply ignore? how many years have you been paying? And what is the total premium? How much you able to recover?

After 65, the premium for term spike, the reason is very simple, most people die after 65 years old, which means most likely you will be non stop paying until 65 years old.

Shld sic the premiums paid also

 

[OngHuatHuat]

Yes correct, you buy term with a lot of coverage, but you die at age 66, you get nothing but just non stop funding insurer expenses.

If you want to get term cover up to 70 years old, it will be super expensive, may even be more expensive than certain limited pay whole life.
You thought insurer stupid by pricing term up to 65 years old cheap? That is just because most people die after 65 years old not before that.

Think!!!!!

the value is unimpressive because of the wasteful expenses by insurers. think fees, comms, awards ceremonies, incentive trips etc

 

[appleyum]

last time i also got a lady agent under prudential one.
she tell me to invest what china india fund. Nv help me monitor until one day i went in to check.. it lost $$. Cut lost. I still had another one which is invest @ singapore bond.
When invest, she told me she will monitor.

You seriously believe and think your agent is so free to everyday monitor your Prudential Investment link fund ah.

Tiagong whatever your agent promise you few years ago now totally forgotten liao.

It is just an empty promise to make you sign the dotted line so that they can earn your commission to fund their luxury cars, AP watch, holiday and fine dinning.



My Prulink Singapore managed fund investment link policy. Their so call star performer. I bought that time around $100. I sell 2016 around $350. The chart even show a 45 degree upward trend. Like that the profit generated for 20 years is only a pathetic $1000 plus. Total amount I put in is $24,000.

Seriously if this is not a scam I don't know what it is.

 

[Mecisteus]

Yes correct, you buy term with a lot of coverage, but you die at age 66, you get nothing but just non stop funding insurer expenses.

If you want to get term cover up to 70 years old, it will be super expensive, may even be more expensive than certain limited pay whole life.
You thought insurer stupid by pricing term up to 65 years old cheap? That is just because most people die after 65 years old not before that.

Think!!!!!

You probably don't understand the fundamental reasonings of a BTITR approach.

By the way, this thread is about Prudential and endowments. The latter is related to savings and minimal insurance protection. So stick to the topic.

 

[akwl88]

I think you have been shifting your goal post.

Your premium for term really so cheap such that you can simply ignore? how many years have you been paying? And what is the total premium? How much you able to recover?

After 65, the premium for term spike, the reason is very simple, most people die after 65 years old, which means most likely you will be non stop paying until 65 years old.

huh?

you are comparing returns of wholelife plan

so sic the premiums paid vs the returns you are getting

if want compare term cost vs protection coverage, can do so too with whole life

 

[akwl88]

Yes correct, you buy term with a lot of coverage, but you die at age 66, you get nothing but just non stop funding insurer expenses.

If you want to get term cover up to 70 years old, it will be super expensive, may even be more expensive than certain limited pay whole life.
You thought insurer stupid by pricing term up to 65 years old cheap? That is just because most people die after 65 years old not before that.

Think!!!!!

huh?

how come you expect to get something from term insurance? it is for protection, not for investment returns

protection from the period the policy in force till 65

like i mentioned, you want compare cost vs protection coverage or compare cost vs returns?

 

[Shion]

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