Surrendering Endowment Policies

[anfielder]

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.

Low interest rate environment. Which is true, but cold comfort to those affected.

 

[FP_IFA]

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.

That's good. Do check with your FA on this issue as well.

Generally surrendering a plan is not a good thing to do. Be careful of being ask to surrender one plan and then get another new plan. Very often it is not beneficial to you. Always look at not just the projected value but also the guaranteed value.

 

[anfielder]

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.

Financial advisers don't always know better. They are probably taught only what they need to know to sell their products.

 

[maruikun]

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

Just curious does your trusted financial advisors advise you to put your money into SA? So far I have not met a financial advisor that recommends putting money into CPF although the interest rate is deemed better than endowment/ILP returns.

Insurance agent always preach endowment plan is to save for a purpose. So for your case it may be appropriate to transfer your money into SA because you do not need the money now. But this approach may not be applicable to the norm out there because money into SA cannot be taken out except to left it inside to compound interest for retirement purpose.

You will be surprised that nowadays alot of youngsters live paycheck to paycheck and savings is not their priority. The issue could be due to their wealthy parents or saving habits is not engraved into their mind. There is a reason why this is called forced savings because youngsters does not have the discipline to do it.

I am not a fan of endowment plan but just speaking my opinion.

 

[akwl88]

have not encounter a single plan with surrenderd GV more than premiums paid

 

[smallfry]

Just curious does your trusted financial advisors advise you to put your money into SA? So far I have not met a financial advisor that recommends putting money into CPF although the interest rate is deemed better than endowment/ILP returns.

Insurance agent always preach endowment plan is to save for a purpose. So for your case it may be appropriate to transfer your money into SA because you do not need the money now. But this approach may not be applicable to the norm out there because money into SA cannot be taken out except to left it inside to compound interest for retirement purpose.

You will be surprised that nowadays alot of youngsters live paycheck to paycheck and savings is not their priority. The issue could be due to their wealthy parents or saving habits is not engraved into their mind. There is a reason why this is called forced savings because youngsters does not have the discipline to do it.

I am not a fan of endowment plan but just speaking my opinion.

My SA is already maxed out. I know this is a nice problem to have but I can't put in anymore into my SA.

Sidenote: I'm happy to have hit my 20th post milestone.

 

[oceanicmanta]

have not encounter a single plan with surrenderd GV more than premiums paid

I have 2.
Both BE after 16 yrs (last year), earlier than the 25yrs projected to BE in BI.

(based on guaranteed SV basis, excluding interest cost)

 

[akwl88]

I have 2.
Both BE after 16 yrs (last year), earlier than the 25yrs projected to BE in BI.

(based on guaranteed SV basis, excluding interest cost)

haha i mean yearly surrendered value

means at any time you surrender, the GV is more than the premiums paid, even if it is 1 year later

 

[kannis_ng]

Just kpkb at customer service

 

[oceanicmanta]

In my policy, there is Gross Surrender Value = Guaranteed SV plus non-Guaranteed SV.

For pre-mature termination, will there be any non Guaranteed SV payable ?

Is Gross SV only applicable if policy is held to maturity ?

Just curious why in the BI, Gross SV is shown for every year til maturity, even if it is not applicable on early termination.

 

[akwl88]

I managed to get into contact with a US investment professional David Merkel. David is a trained life actuary as well as a CFA. He current managed his own fund, Aleph Investments, and talks about investment mainly in the domain of bonds and insurance companies at The Aleph Blog.

So I pose this question to David:

When I know that you are trained as an actuary it got me curious. They say that actuary assess the risks of insurance products to find value for consumers, at the same time evaluate the probable risks of the product.

What kind of insurance does an actuary actually buy for his and his family? Insurance are often sold with economic bias so what better way to know then find out from people that use actual data and determined it through quantifiable methods.

I heard that actuaries often buy only term life insurance only and that investment linked and limited whole life policies do not make sense. At the same time, it would seem that the way you can claim critical illness is such that most of the time you can claim it, you are almost very disabled or near death. In such a scenario wouldnt [sic] a pure death and tpd [sic] term life be suffice?

David’s reply was as follows:

This is my opinion, given my dealings among actuaries. I could be wrong. Actuaries avoid complexity in insurance products. Why? In general, complex products hide high profit margins. Products that are easy to analyze, like term life insurance, are competitive, and profit margins are low.

The same is true for savings products, like deferred annuities. Actuaries tend to buy simple products that cover basic needs.

Also, they tend to use insurance as catastrophe cover, because they know that having insurance companies pay on a lot of small claims is expensive on average.

There is an exception to all of this. If you are so rich as to need to stiff the taxman, buying cash value insurance policies can make a lot of sense. In that case, wealthy actuaries with clever tax advisors buy cash value life insurance. Death benefits do not pass through the estate.

Actuaries are generally conservative, and avoid insurance products that are not easily analyzed. That should be true of most insurance buyers.

http://investmentmoats.com/budgetin...-a-trained-actuary-stick-to-simple-insurance/