Pruflexicash and cashbacks

[tangent314]

In conclusion, I should leave the cashbacks as it is ?

If you are able to show us your BI, ideally one with and one without taking the cashback, we can probably calculate for you what is the better route given the interest rate you expect to get from outside. Can also compare against just surrendering the whole plan.

 

[SolarPanel]

If you are able to show us your BI, ideally one with and one without taking the cashback, we can probably calculate for you what is the better route given the interest rate you expect to get from outside. Can also compare against just surrendering the whole plan.

Here:

 

[Mecisteus]

Here:

If I understand correctly, you are paying $145 monthly.

After end of 5 years, you can take back $1k annually?

 

[tangent314]

Not sure what your cashback amount is, so I can't compare that.

Your premium seems to be $1748.08 and there is a ~$80k death benefit, I assume with TPD but no CI. I'm not sure your age, and a $75k Aviva Direct term plan for 20 years from age 40 is about $148/yr, so let's assume that leaves with you $1600 per year to invest for 21 more years after surrendering at year 4 for $3631, and you want to try to beat the non-guaranteed total of $57222. Plugging this into TVM calculator:

So you need to be able to invest with a compounding interest of 3.69% to beat $57222. You can safely achieve that by putting your money into SA (and get tax refunds!). I believe the non-guaranteed amount assumes that the prudential par fund performs at 4.75%. If you can also get 4.75% with STI ETF then $57222 is easily beaten.

 

[SolarPanel]

If I understand correctly, you are paying $145 monthly.

After end of 5 years, you can take back $1k annually?

I am paying roughly $1750 annually. My cashback is $1k annually (I have received 2 cashbacks so far)

 

[Mecisteus]

I am paying roughly $1750 annually. My cashback is $1k annually (I have received 2 cashbacks so far)

Your loss is not much then.

Cut loss and terminate early. There are better options out there.

 

[SolarPanel]

Not sure what your cashback amount is, so I can't compare that.

Your premium seems to be $1748.08 and there is a ~$80k death benefit, I assume with TPD but no CI. I'm not sure your age, and an Aviva Direct term plan for 20 years from age 40 is about $148/yr, so let's assume that leaves with you $1600 per year to invest for 21 more years after surrendering at year 4 for $3631, and you want to try to beat the non-guaranteed total of $57222. Plugging this into TVM calculator:

So you need to be able to invest with a compounding interest of 3.69% to beat $57222. You can safely achieve that by putting your money into SA (and get tax refunds!). I believe the non-guaranteed amount assumes that the prudential par fund performs at 4.75%. If you can also get 4.75% with STI ETF then $57222 is easily beaten.

My cashback amount is $1k annually. In total I should be receiving 24 cashbacks till policy maturity. Yes, the non-guarenteed in the picture is for par fund performing at 4.75%.

 

[tangent314]

The difference between withdrawing and leaving the cashback is 57222 - 27685 = $29537

Plug this into the TVM calculator
PV = $0
PMT = $1000
FV = 29537
Periods = 21 Years

Result: Interest = 3.27%

So again, if you can beat 3.27%, then it's better to take the cashback and invest.

 

[SolarPanel]

Your loss is not much then.

Cut loss and terminate early. There are better options out there.

The difference between withdrawing and leaving the cashback is 57222 - 27685 = $29537

Plug this into the TVM calculator
PV = $0
PMT = $1000
FV = 29537
Periods = 21 Years

Result: Interest = 3.27%

So again, if you can beat 3.27%, then it's better to take the cashback and invest.

Thanks for the suggestions

@tangent314 - like for eg. DCA in ETFs ?

 

[tangent314]

If you are taking out the cashback then there's no point DCAing, just invest it all immediately when you receive it.

If you are surrendering the plan, then invest the entire surrender value and setup a RSP right after.

 

[bibu00]

This plan is the best money maker for the company and agents alike.

 

[Shion]

This plan is the best money maker for the company and agents alike.

Think PruFlexicash has the most threads in this section

 

[Sylar22]

If you are taking out the cashback then there's no point DCAing, just invest it all immediately when you receive it.

If you are surrendering the plan, then invest the entire surrender value and setup a RSP right after.

Is it worth to surrender on the 9th policy year ?

 

[tangent314]

Post your latest BI so we can have a look at whether it is worth surrendering

 

[bakasora]

I found out I have this plan too. I don't really in need of the money. I just keep paying until 25th year, can get back principal money + small bonus?