PruFlexiCash Protection Plus - Should cancel????

[blurpandasg2014]

My friend just sent me his endowment plan that he got from prudential somewhere in July2013. Sum Assured is 48k, Premium $119.65/Month, payable for 15years. Btw he is a smoker.

The returns is really HORRIBLE!!!!
at 3.25% projection, He gets back LESS THAN HIS PREMIUM PAID.
IRR at 4.75% is 0.81433%

Please advice if he should cancel the plan ?

 

[Shiny Things]

Please advice if he should cancel the plan ?

Cancel it. Call it a $2,000 lesson in "why not to buy endowment plans".

 

[savesmart]

That's because what your friend got was an endowment plan with an insurance element. Notice that the sum assured is more than 200% of the premiums payable. Insurance always comes at a cost.

If you're friend was looking solely at investment/savings, he could have gone for a pure endowment plan for which the sum assured is usually only 101% of the premiums payable. This would mean that the premiums would be devoted to investment and such plans are most likely to at least offer a guarantee on capital upon maturity.

That's the problem when people buy things they don't really have full comprehension of. They end up with something they don't want. Just as in equities or any other asset, not all plans are made equal - there are different varieties of the same category of plans (endowment plans in this case) to suit the specific needs of different individuals.

As to whether or not your friend should surrender the policy prematurely, it's an option to consider if he does not need the insurance element and feels alright with cutting losses.

My friend just sent me his endowment plan that he got from prudential somewhere in July2013. Sum Assured is 48k, Premium $119.65/Month, payable for 15years. Btw he is a smoker.

The returns is really HORRIBLE!!!!
at 3.25% projection, He gets back LESS THAN HIS PREMIUM PAID.
IRR at 4.75% is 0.81433%

Please advice if he should cancel the plan ?

 

[FP_IFA]

I am not a prudential agent but I can tell you part of the reason why your endowment returns are not matching up to your premium is because that endowment plan has a death/TPD/TI cover of about $50,000.

Since part of that $119.65 premium would go into covering your friend's death/TPD/TI, it is unfair to directly compare premium pay vs maturity value this way.

Other than your friend is a smoker, also need to know how old is he.

 

[blurpandasg2014]

He is 26yo. Will it be advisable for him to cancel this plan and for death tpd cover, up his saf aviva?

As for savings wise, any other plans with capital guaranteed and better returns?

 

[Perisher]

He is 26yo. Will it be advisable for him to cancel this plan and for death tpd cover, up his saf aviva?

As for savings wise, any other plans with capital guaranteed and better returns?

1) Wait for Singapore Savings Bond to launch 2nd half of the year. 2-3% per year if hold for 10 year.
2) Another option is Esaver which pays 1.4% depending on amount and how you manage the account.
3) A35 is a bond that pays 2% annually with low price volatility. Likely that 10 years later, it would still be around what it's worth now.
4) CIMB 0.8%.

Option 1,2,4 are capital guaranteed.

5) Bonus: If your friend can take on higher risk, buy into VWRD, VUSD, STI in equal portion. Throw in A35 to reduce the risk abit and you are golden.
This would likely outdo any option above and definitively above most if not all insurance products over the long term. Base on history, returns will be around 8-10%+ per year.

 

[NiteX2]

He is 26yo. Will it be advisable for him to cancel this plan and for death tpd cover, up his saf aviva?

As for savings wise, any other plans with capital guaranteed and better returns?

Actually there are plenty around in the market now with capital guaranteed and better returns. Premium terms are shorter at 10 years and maturity can be 15 years or longer.

 

[FP_IFA]

He is 26yo. Will it be advisable for him to cancel this plan and for death tpd cover, up his saf aviva?

As for savings wise, any other plans with capital guaranteed and better returns?

26 yo is young so premium for cover should be low. As such the Pru plan looks overpriced. The SAF Group term plan might not be the cheapest for younger person. If you would to notice the premium is fixed whether the person is 22 or 55 yo. For younger age, private term plan might be cheaper (depending also on amount insured).

Pure savings with capital guaranteed, the 5 Pay 10 plans from TM, Aviva and NTUC could give you about 3%+ annual return. Lowest guaranteed return about 1%.

Singapore saving bonds I have no idea what is the return going to be like 2nd quarter. It seems to hover around 2.4% to 2.5%. No info on fees involved yet as well. If can wait, no harm holding on till then to decide.

 

[Perisher]

26 yo is young so premium for cover should be low. As such the Pru plan looks overpriced. The SAF Group term plan might not be the cheapest for younger person. If you would to notice the premium is fixed whether the person is 22 or 55 yo. For younger age, private term plan might be cheaper (depending also on amount insured).

Pure savings with capital guaranteed, the 5 Pay 10 plans from TM, Aviva and NTUC could give you about 3%+ annual return. Lowest guaranteed return about 1%.

Singapore saving bonds I have no idea what is the return going to be like 2nd quarter. It seems to hover around 2.4% to 2.5%. No info on fees involved yet as well. If can wait, no harm holding on till then to decide.

Just curious,
Why is the SAF Group term plan not the cheapest? For just $64/month, can cover for half a million. Trying to find out which plans can top that for pure term plan with 0 investment?

http://www.aviva.com.sg/pdf/SAF_GTL_Brochure.pdf

 

[blurpandasg2014]

Pure savings with capital guaranteed, the 5 Pay 10 plans from TM, Aviva and NTUC could give you about 3%+ annual return. Lowest guaranteed return about 1%.

I think saf Aviva will be cheaper cause he is a smoker and private term insurance will have mch higher premium while saf aviva doesnt take into consideration abt smoking.

Do u have any tm, aviva, ntuc plans to recommend of similar premiums payable 10yrs mature 15yrs

 

[hwmook]

Just curious,
Why is the SAF Group term plan not the cheapest? For just $64/month, can cover for half a million. Trying to find out which plans can top that for pure term plan with 0 investment?

http://www.aviva.com.sg/pdf/SAF_GTL_Brochure.pdf

He is not wrong. NTUC iTerm for example buy at 30 years old for 5 years term only need to pay $41.20 for half a million coverage.

I just check out the NTUC e-term plan, for a 26 years old smoker on 5 years term is $15.50 for $200k sum assured. For a 30 years old non-smoker male, its only $12.30. Aviva SAF plan cost $25.6 for the same $200k coverage although it does have more fringe benefits...

 

[Perisher]

He is not wrong. NTUC iTerm for example buy at 30 years old for 5 years term only need to pay $41.20 for half a million coverage.

I just check out the NTUC e-term plan, for a 26 years old smoker on 5 years term is $15.50 for $200k sum assured. For a 30 years old non-smoker male, its only $12.30. Aviva SAF plan cost $25.6 for the same $200k coverage although it does have more fringe benefits...

Never said he is wrong, I just wanna know which one is the best. Thanks, will check out iTerm.

 

[Shion]

I also have this PruFlexiCash plan, my total returns is more than my total premiums paid

 

[Lewis.T]

Never said he is wrong, I just wanna know which one is the best. Thanks, will check out iTerm.

Could also check out PruTerm Vantage from my side.

Male, non-smoker, anb 30, 500k death only for the next 25 years would be $460.00/Yr. (Non-discounted quote)

Currently having a promotion from the start of this month till 31st May, giving you up to 30% off the first year premiums. I won't link it here in case of forum rules but you can look it up at Prudential's website.

Edit: Perhaps I should comment a bit on the PruFlexiCash Protection Plus, this plan is called Protection Plus because there is a strong element of protection (as compared to similar endowment plans) involved. Insurance will always be a cost, and hence detracts from the cash value of the plan.

If your friend is looking for 50k thereabouts of coverage for 15 years and wants to receive all his premiums back after 15 years this could be for him. I was not the one who sat down with him but do ask what is his intention when getting the plan, as different plans cater to different needs.

 

[ipaq4444]

He is not wrong. NTUC iTerm for example buy at 30 years old for 5 years term only need to pay $41.20 for half a million coverage.

I just check out the NTUC e-term plan, for a 26 years old smoker on 5 years term is $15.50 for $200k sum assured. For a 30 years old non-smoker male, its only $12.30. Aviva SAF plan cost $25.6 for the same $200k coverage although it does have more fringe benefits...

e-term and I-term the same thing?
does it does not cover CI right?

problem with all these term coverage is that the premium goes up sharply after 55 years old where cu is likely to strike

 

[blurpandasg2014]

Could also check out PruTerm Vantage from my side.

Male, non-smoker, anb 30, 500k death only for the next 25 years would be $460.00/Yr. (Non-discounted quote)

Currently having a promotion from the start of this month till 31st May, giving you up to 30% off the first year premiums. I won't link it here in case of forum rules but you can look it up at Prudential's website.

Edit: Perhaps I should comment a bit on the PruFlexiCash Protection Plus, this plan is called Protection Plus because there is a strong element of protection (as compared to similar endowment plans) involved. Insurance will always be a cost, and hence detracts from the cash value of the plan.

If your friend is looking for 50k thereabouts of coverage for 15 years and wants to receive all his premiums back after 15 years this could be for him. I was not the one who sat down with him but do ask what is his intention when getting the plan, as different plans cater to different needs.

His agent just introduced this plan to him without explaining that this plan has extra protection. He just marketed this plan as a savings plan to help him "force save"

 

[blurpandasg2014]

e-term and I-term the same thing?
does it does not cover CI right?

Yes both are same. However eterm can purchase online up to 200k cover. I-term can purchase above 200k and have an option to add ci rider

 

[FP_IFA]

Just curious,
Why is the SAF Group term plan not the cheapest? For just $64/month, can cover for half a million. Trying to find out which plans can top that for pure term plan with 0 investment?

http://www.aviva.com.sg/pdf/SAF_GTL_Brochure.pdf

Anything that is 1mil cover, the various insurers also starts to give large sum cover discount.

Some insurers also has some discount on smoker. Manulife 1st 3 years premium for smoker are tag to standard rate in an effort to give smoker the time to quit smoker. For 1mil death and tpd cover to age 65, it is only $94.33 per month for a 26 year old. SAF group term life would have cost $128.

Lots of options out there but the person must know what he needs first.

 

[hwmook]

e-term and I-term the same thing?
does it does not cover CI right?

problem with all these term coverage is that the premium goes up sharply after 55 years old where cu is likely to strike

iTerm is NTUC usual term insurance while eTerm is the new term insurance which you can purchase online without going through agent so the price is lower but coverage cap at $200k.

The main purpose of buying a term insurance is to provide coverage for your dependents in case you pass away prematurely and do not leave enough money for your dependents. By the time you reach 55, your kids are already adults and can fend for themselves. You should also have enough savings to prepare for retirement so you dying off should leave the retirement money to your spouse which should be more than enough for 1 pax instead of 2.... You shouldn't even be buying insurance when you are 55, don't waste your money.