Surrendering Endowment Policies

[oceanicmanta]

Suppose I have decided to terminate endowment policy early.

Wondering when would be the best timings, if any, to do so.

ie should one surrender
- close to next premium payment but not middle of premium year ?
- in a year where Par Fund performance is doing better ?
- after bonus declaration ?

any other factors that could affect the Surrender Value ?

 

[dendii]

There is no best timing to do so.

Par Fund Performance cant be predicted so there is no way to time this.

You can work out whats the least amount you can lose by calculating the premium you have put in versus the amount you can take back.

Eg. 4th year total premium put in 8k, able to take back 4k vs 3.6 year total premium put in 7k, able to take back 2.5k

 

[badsector]

end of maturity should be best?

 

[Shion]

Terminating endowment early would lose money (surrender value will be lower than total premiums paid to date), so it really depends on yourself.

 

[Mecisteus]

If you are in the early stage of your policy ie <3-5 years, the earliest you surrender the better.

 

[oceanicmanta]

My endowments are already 15 to 17 years using my CPF OA, have another 10 to 15 years more to go.
Considered as a whole, they are about breakeven on a guaranteed basis now.
However, not sure how whether the projected values can be realised in future (so far, it pretty much on track).
Have intention to surrender, then transfer from OA to SA to get 4% pa.

 

[Mecisteus]

Call and ask what is the surrender value.

If more than break even, then it is a no brainer. Surrender and put into SA. Your policy is unlikely to beat the SA rate.

 

[oceanicmanta]

have sent them email. waiting response.

agree 4% guarantee in RA is hard to beat.

 

[smallfry]

Need your advice.

Hi everyone. Seems like some of you are very knowledgeable in such stuff, which I had enjoyed reading your replies in this, as well as other threads.

Sadly, I had an endowment for many years, paying 14 years till date. Needless to say, it has yet to break even. Frankly, I don't know if it will ever break even when it matures, as the guaranteed surender sum had been decreasing every year. Can I seek your help to look at my BI and advise me if I should cut losses now or any better future time to do so? Or should I just hold it till maturity? I am not able to take the surrender amount and put it in the CPF SA Account. In other words, I do not have a better alternative than the 3% interest on this plan's survivial benefit is giving me, which yet again, is not guaranteed.

With this mistake of mine, I also want to take this opportunity to share with everyone not to get any of these long-term endowment or savings plans. I learnt my lesson so I hope you don't part your hard-earned money with these unscrupulous financial advisors (esp those from banks) who are trying to sell you such plans.

 

[wahkao3]

low risk hight return
or
high risk low return?

 

[FP_IFA]

Hi everyone. Seems like some of you are very knowledgeable in such stuff, which I had enjoyed reading your replies in this, as well as other threads.

Sadly, I had an endowment for many years, paying 14 years till date. Needless to say, it has yet to break even. Frankly, I don't know if it will ever break even when it matures, as the guaranteed surender sum had been decreasing every year. Can I seek your help to look at my BI and advise me if I should cut losses now or any better future time to do so? Or should I just hold it till maturity? I am not able to take the surrender amount and put it in the CPF SA Account. In other words, I do not have a better alternative than the 3% interest on this plan's survivial benefit is giving me, which yet again, is not guaranteed.

With this mistake of mine, I also want to take this opportunity to share with everyone not to get any of these long-term endowment or savings plans. I learnt my lesson so I hope you don't part your hard-earned money with these unscrupulous financial advisors (esp those from banks) who are trying to sell you such plans.

Hi smallfry,

are you sure the guaranteed surrender value has been decreasing? As a rule, guaranteed surrender value don't change. The only thing that will change should be the non-guaranteed value. The total surrender value would be make up of the guaranteed + the non-guaranteed value.

 

[smallfry]

Yes, you are correct in identifying my typo. It is the non-guaranteed surrender value, which decreased every year without fail.

 

[Shion]

Manulife...Hmm...

The other time someone opened a thread here complaining about them cutting the bonuses (or something like that)

 

[Shion]

http://forums.hardwarezone.com.sg/money-mind-210/manulife-5407748.html

 

[akwl88]

Moi see the BI want to arm chio

1) guranteed value a lot less than premiums paid

2) as ts mentioned, non guranteed values decreasing yearly

Ts need the money now?

 

[oceanicmanta]

Yes, you are correct in identifying my typo. It is the non-guaranteed surrender value, which decreased every year without fail.

is the total SV (guarantee + non guarantee) the same year on year ?

decrease in NG SV could mean it has realised into Guarantee SV.

so if Total is the same, then decreasing NG SV shld not be a concern ?

What was the Guarantee SV the Year before ?

How does this BI compare to original BI ? eg has Projected Maturity Value changed ? (just to confirm if Terminal Bonus changed)

 

[FP_IFA]

Yes, you are correct in identifying my typo. It is the non-guaranteed surrender value, which decreased every year without fail.

If you going to surrender and then put into CPF SA and continue putting in $5918 per year, the end result is about $130,000 7.5 years from now. This plan maturity is between $96,568 (+$2,258) to $152,208. I don't think you going to get $152,208 but neither do I think it will only give you the minimum.

I will probably keep it since it is only 7.5 years to go.

Do look at the number on the tables before signing anything next time.

 

[smallfry]

Moi see the BI want to arm chio

1) guranteed value a lot less than premiums paid

2) as ts mentioned, non guranteed values decreasing yearly

Ts need the money now?

I don't need the money now. Yeah, it's a lesson learnt for me. I hope to at least spread the message, especially those in their 20s with the good intention to save, not to trust these salesman. Unfortunately, I don't have much resources to check with back then, when I don't think there was also any free-look period back then. For those already in long-term endowment plans but are in the initial years, do follow what the rest had advised, cut your losses now and put in SA.

 

[smallfry]

is the total SV (guarantee + non guarantee) the same year on year ?

decrease in NG SV could mean it has realised into Guarantee SV.

so if Total is the same, then decreasing NG SV shld not be a concern ?

What was the Guarantee SV the Year before ?

How does this BI compare to original BI ? eg has Projected Maturity Value changed ? (just to confirm if Terminal Bonus changed)

The projected maturity value always decrease in value, with the most recent official letter received in June, which decreased from about $80k to $75k. I'm think all of us know what the usual excuses for decreasing are.

 

[smallfry]

If you going to surrender and then put into CPF SA and continue putting in $5918 per year, the end result is about $130,000 7.5 years from now. This plan maturity is between $96,568 (+$2,258) to $152,208. I don't think you going to get $152,208 but neither do I think it will only give you the minimum.

I will probably keep it since it is only 7.5 years to go.

Do look at the number on the tables before signing anything next time.

Thanks for the advice. Really appreciate it.

I had since wised up after signing for such endowment plan and hope those who had been financial illiterate like me, will not end up in a situation like me. We hope the experts like the financial advisors can really advise us, not to take advantage when all we want is really just to work and save hard. I'm sure if I call them, they will say the same thing such as to check the numbers on the tables before signing but as advisors, they really should had told us in the beginning.

Despite the above, I do have trusted financial advisors that I use.