Term till 99

[Lewis.T]

hi guys,

i was thinking of increasing my saf group term 200K to 300K. its more better if i get another company for another 100K? to make up 300K?

btw can claim from both company?

Just stick to SAF, better than having multiple policies doing the same thing. Helps with the claims when someone needs to process as well.

To your second question, yes.

 

[chopra]

Like I said. Different strategy for different people. Some want to leave behind a lump sum for their family while still enjoying the protection for illness and disability the policy provides.

If anything were to happen it wouldn't be out of pocket. If you consider the avg Singapore inflation so far at age 65 get your children to take over. It's about 1k a year for 185k death cover. I think the price is acceptable. Your children will probably take over for you if they're smart. That's almost a 20% guaranteed ROI if you pass on at 85. I used 2.8% as inflation for my calculations for those wondering.

Now if you think about it, only an idiot would pass up on this opportunity. 20% guaranteed ROI over 20 years.

For those of you that can't see the value, I'll scale it up a bit. You're paying 100k over 20 years, after 20 years you'll get back 925k. Would you invest in something like this?

Edit: Just woke up, correct me if my calculations are off.

You need to state your working properly. Also the assumptions. It's not guaranteed if this insuree die @ 86.

 

[Lewis.T]

Chopra, guy is ANB 30, inflation is at 2.8%, all the figures there are for you to calculate against mine. Premiums are on a post on the same page.

Yes he may not die at 85, if he dies earlier it's an even greater ROI than 20%, so I'm not sure what you're picking at for that part.

 

[Mecisteus]

Now if you think about it, only an idiot would pass up on this opportunity. 20% guaranteed ROI over 20 years.

Yes he may not die at 85, if he dies earlier it's an even greater ROI than 20%, so I'm not sure what you're picking at for that part.

1) May I know how long has this plan been around?

2) If its new, what makes you think this plan is viable in the longer term assuming that alot of policy holders make their claim earlier? To make this plan viable, that means prudential must generate a much higher returns on their investment to match their potential liabilities (payouts).

 

[Lewis.T]

1) May I know how long has this plan been around?

2) If its new, what makes you think this plan is viable in the longer term assuming that alot of policy holders make their claim earlier? To make this plan viable, that means prudential must generate a much higher returns on their investment to match their potential liabilities (payouts).

1) It's relatively new as compared to the start of Prudential in SG, but I am unable to pinpoint the year it started. However, searches on the internet shows it's about 5 years or so. This competitive pricing isn't just from Prudential. Several other companies have this product as well.

2) Whether it is old or new or viable in the long run does not matter. What you get is level premiums contract based now. It's either they continue it in the future or they don't. I'm sure many actuaries have gone through the proposal for this plan and that's why this plan came into fruition. I wouldn't doubt the actuaries, they deal with the numbers, I deal with the product.

Also, not everybody chooses to go for the full term like you said. Some end up paying for 40 years and pass on without claiming a single dollar, because you chose a shorter term than when death/illness occurred.

My own intuition, definitely viable.

 

[Mecisteus]

1) It's relatively new as compared to the start of Prudential in SG, but I am unable to pinpoint the year it started. However, searches on the internet shows it's about 5 years or so. This competitive pricing isn't just from Prudential. Several other companies have this product as well.

2) Whether it is old or new or viable in the long run does not matter. What you get is level premiums contract based now. It's either they continue it in the future or they don't. I'm sure many actuaries have gone through the proposal for this plan and that's why this plan came into fruition. I wouldn't doubt the actuaries, they deal with the numbers, I deal with the product.

1) When I signed up >5 years ago, I wasnt aware of competitive term insurance from prudential. Based on your latest information, prudential term insurance now seems to be offering a better rate. Yes others are offering the same products too but not at such lower rates.

2) It does matter for current policy holders to consider the risk. The risk of whether prudential is able to honor to future claims. Like you said, the guaranteed 20% ROI sounds too good to be true (Assuming our life expectancy is <85). Of course I may be asking the wrong person as you are dealing with sales and you wouldnt care on the liability side of the company.

I hope to hear inputs from the others.

 

[Lewis.T]

1) Exactly why the mindset of term to 100 is bad mindset has to change. Because prices change, policies evolve.

2) We have a capital adequacy ratio of 257% in 2012, with a credit rating of AA from S&P, making us the highest rated insurer in Singapore. Please don't confuse sales with facts, I'm here to present factual information, and not a sales pitch. This is of course for the people who want the information to be available to them before making a decision.

You are more than welcome to wait for opinionated input, above in point #2 are the facts for you.

Just to clarify, in case you misunderstood, the 20% ROI is based on someone taking over the policy after it has been in force for 35 years, where term till age 65 would end, and the new payer pays for the next 20 years till the death of the insured.

 

[chopra]

Chopra, guy is ANB 30, inflation is at 2.8%, all the figures there are for you to calculate against mine. Premiums are on a post on the same page.

Yes he may not die at 85, if he dies earlier it's an even greater ROI than 20%, so I'm not sure what you're picking at for that part.

Actuarist won't do it that way.
You need to add the word "expected" roi, as it is a function of probability.

Painting a "20%" if you don't factor in probability, is Akin to telling someone that winning top 4d price is 3000%roi.


2cents.

 

[Lewis.T]

Actuarist won't do it that way.
You need to add the word "expected" roi, as it is a function of probability.

Painting a "20%" if you don't factor in probability, is Akin to telling someone that winning top 4d price is 3000%roi.


2cents.

I gave a scenario, I gave the numbers, I gave the assumptions. In that scenario it's a 20% guaranteed ROI. Please don't discredit the idea when you don't even bother to go through my posts extensively. Thank you.

What you are doing is trying to defend your strategy by discarding mine before even reviewing it. I may be wrong in my numbers but you have not even gone through it and proved me otherwise. Instead you're harping on my English terms? Strawman much?

 

[Shiny Things]

Just to clarify, in case you misunderstood, the 20% ROI is based on someone taking over the policy after it has been in force for 35 years, where term till age 65 would end, and the new payer pays for the next 20 years till the death of the insured.

Yeah, no. That's cheating.

By the time the second person takes over the policy, the first person has already paid hundreds of thousands of dollars extra that they won't see a dime of.

You can't say "oh it's a 20% ROI [for the second person]" without mentioning that the first person massively subsidises that return, otherwise you're basically lying.

Just stop it, dude. Stop with the funny math. Stop with the being an asshole in the other thread that you're wrangling in. Behave yourself.

All you need to say is "it looks like Prudential is underpricing their term to 100 product", because it looks like they are. Term-to-99 at less than twice the price of term-to-65 is cheap.

(Or now that I think of it, they might be overpricing the term-to-65 instead. Does anyone else have a quote for term to age 65, age 30 next birthday, male nonsmoker?)

 

[Lewis.T]

Yeah, no. That's cheating.

By the time the second person takes over the policy, the first person has already paid hundreds of thousands of dollars extra that they won't see a dime of.

You can't say "oh it's a 20% ROI [for the second person]" without mentioning that the first person massively subsidises that return.

Just stop it, dude. Stop with the funny math. Stop with the being an asshole in the other thread that you're wrangling in.

All you need to say is "it looks like Prudential is underpricing their term to 100 product", because it looks like they are. Term-to-99 at less than twice the price of term-to-65 is cheap.

Using your analogy, if you paid for term insurance till 65 and don't die you get nothing back. The first person has made a loss in that scenario then? Because there's nothing left of it.

All you got was a feel good factor knowing that whatever happens my family will be safe. Buying term till 99 means you pay more, definitely, but I now have the option to 'sell' this off to my NOK for fat margins.

Edit:

By the time the second person takes over the policy, the first person has already paid hundreds of thousands of dollars extra that they won't see a dime of.

No, it's 660/year or 23.1k premiums in difference over 35 years. Personally I feel I'm willing to do that tradeoff of opportunity cost for the payout my family will definitely receive. Maybe it's just me, but I see value in this.

Price is what you pay, value is what you get.

 

[focus1974]

Ok, so I think I have a term plan till 65yrs old from aviva or aia.. for $600k coverage.
If I want to buy the Prudential Term to 99yrs old for another $600k ....
is it possible for me to claim both if i touch wood die at 64yrs old?

 

[Lewis.T]

Ok, so I think I have a term plan till 65yrs old from aviva or aia.. for $600k coverage.
If I want to buy the Prudential Term to 99yrs old for another $600k ....
is it possible for me to claim both if i touch wood die at 64yrs old?

Yes you can, but weigh for yourself a bit if you're overinsuring, or are willing to pay extra for insurance.

 

[chopra]

Lewis, I must repeat again.
Your assumptions are way under-described.
It is hard to read extensively, without understanding these assumptions.

 

[Lewis.T]

Lewis, I must repeat again.
Your assumptions are way under-described.
It is hard to read extensively, without understanding these assumptions.

Okay, let's not making it too confusing then. Let's just compare them side by side.

Term till 65 vs term till 100
Age 30 male non smoker
500k coverage Death
Yearly premium till 100 is $1,465.00
Yearly premium till 65 is $805.00

Difference in premiums payable till age 65 = +$23100
Plan terminates at age 65, no coverage offered, no ability to renew.
Total spent = 28175
If you want to calculate your own opportunity cost please do so, you are more likely to know the expected returns on your portfolio than I do

Now, on the other hand, if I can pay $23100 extra over 35 years, I now have a term plan which I can still continue, or someone else can do that. Payout of 500k is a guaranteed event. Will your opportunity cost + new premiums opportunity cost reach 500k at the national average of death in Singapore? (Not even at 7% ROI)

Of course, this strategy only caters to family oriented people, because you won't live to see the payout. (lol pun)

The final question is this, are you willing to pay $660 a year more in premiums for 35 years for the option for your family to earn more money in the long run? Empires usually aren't usually built in one generation. The second needs to be born into wealth.

 

[Mecisteus]

The following illustration is much clearer.

Conclusion: At at an investment returns of 7%, your premiums saved for NOT taking term till 100 is still below the 500k payout. In other words, its worth considering a term till 100.

Current Age 30
Term till 65

Yearly premium $805
Monthly premium $67
Total Premiums paid $28,175

Yearly premium $805
Monthly premium $67
Total Premiums paid $28,175
Future value of premiums saved @ 65 0% $23,100.00
Future value of premiums saved @ 65 3% $39,904.97
Future value of premiums saved @ 65 5.07% $60,482.97
Future value of premiums saved @ 65 7% $91,236.34

Future value of premiums saved @ 70 0% $30,425.00
Future value of premiums saved @ 70 3% $54,038.69
Future value of premiums saved @ 70 5.07% $85,557.33
Future value of premiums saved @ 70 7% $136,388.52

Future value of premiums saved @ 75 0% $37,750.00
Future value of premiums saved @ 75 3% $70,423.53
Future value of premiums saved @ 75 5.07% $117,666.09
Future value of premiums saved @ 75 7% $199,716.79

Future value of premiums saved @ 80 0% $45,075.00
Future value of premiums saved @ 80 3% $89,418.06
Future value of premiums saved @ 80 5.07% $158,782.69
Future value of premiums saved @ 80 7% $288,537.96

Future value of premiums saved @ 85 0% $52,400.00
Future value of premiums saved @ 85 3% $111,437.92
Future value of premiums saved @ 85 5.07% $211,434.20
Future value of premiums saved @ 85 7% $413,114.24

Future value of premiums saved @ 90 0% $59,725.00
Future value of premiums saved @ 90 3% $136,964.98
Future value of premiums saved @ 90 5.07% $278,856.65
Future value of premiums saved @ 90 7% $587,838.93

Future value of premiums saved @ 95 0% $67,050.00
Future value of premiums saved @ 95 3% $166,557.83
Future value of premiums saved @ 95 5.07% $365,193.90
Future value of premiums saved @ 95 7% $832,899.34

Future value of premiums saved @ 100 0% $74,375.00
Future value of premiums saved @ 100 3% $200,864.06
Future value of premiums saved @ 100 5.07% $475,752.32
Future value of premiums saved @ 100 7% $1,176,609.24


Current Age 30
Term till 100

Yearly premium $1,465
Monthly premium $122
Total Premiums paid $102,550

 

[chopra]

Okay, let's not making it too confusing then. Let's just compare them side by side.

Term till 65 vs term till 100
Age 30 male non smoker
500k coverage Death
Yearly premium till 100 is $1,465.00
Yearly premium till 65 is $805.00

Difference in premiums payable till age 65 = +$23100
Plan terminates at age 65, no coverage offered, no ability to renew.
Total spent = 28175
If you want to calculate your own opportunity cost please do so, you are more likely to know the expected returns on your portfolio than I do

Now, on the other hand, if I can pay $23100 extra over 35 years, I now have a term plan which I can still continue, or someone else can do that. Payout of 500k is a guaranteed event. Will your opportunity cost + new premiums opportunity cost reach 500k at the national average of death in Singapore? (Not even at 7% ROI)

Of course, this strategy only caters to family oriented people, because you won't live to see the payout. (lol pun)

The final question is this, are you willing to pay $660 a year more in premiums for 35 years for the option for your family to earn more money in the long run? Empires usually aren't usually built in one generation. The second needs to be born into wealth.

1.The red is again wrong. It is not guaranteed. Quit using this word as people might not understand. A heavier word will be misleading. Remember, there are people living beyond 100.

2. Your way of analysis is flawed. You painted a very nice picture of "only" $23100 to get a "guaranteed" $500k. Did you forget the premium that one has to pay >65 year old? If one were to live till 100year old, that person has to pay another $50k, not accounting for future value.

 

[chopra]

The following illustration is much clearer.

Conclusion: At at an investment returns of 7%, your premiums saved for NOT taking term till 100 is still below the 500k payout. In other words, its worth considering a term till 100.

Current Age 30
Term till 65

Yearly premium $805
Monthly premium $67
Total Premiums paid $28,175

Future value of premiums saved @ 65 0% $23,100.00
Future value of premiums saved @ 65 3% $39,904.97
Future value of premiums saved @ 65 5% $59,611.40
Future value of premiums saved @ 65 7% $91,236.34

Future value of premiums saved @ 70 0% $30,425.00
Future value of premiums saved @ 70 3% $47,682.86
Future value of premiums saved @ 70 5% $67,706.45
Future value of premiums saved @ 70 7% $99,661.17

Future value of premiums saved @ 75 0% $37,750.00
Future value of premiums saved @ 75 3% $56,699.56
Future value of premiums saved @ 75 5% $78,038.02
Future value of premiums saved @ 75 7% $111,477.44

Future value of premiums saved @ 80 0% $45,075.00
Future value of premiums saved @ 80 3% $67,152.38
Future value of premiums saved @ 80 5% $91,224.00
Future value of premiums saved @ 80 7% $128,050.36

Future value of premiums saved @ 85 0% $52,400.00
Future value of premiums saved @ 85 3% $79,270.07
Future value of premiums saved @ 85 5% $108,053.03
Future value of premiums saved @ 85 7% $151,294.74

Future value of premiums saved @ 90 0% $59,725.00
Future value of premiums saved @ 90 3% $93,317.80
Future value of premiums saved @ 90 5% $129,531.60
Future value of premiums saved @ 90 7% $183,896.18

Future value of premiums saved @ 95 0% $67,050.00
Future value of premiums saved @ 95 3% $109,602.96
Future value of premiums saved @ 95 5% $156,944.31
Future value of premiums saved @ 95 7% $229,621.39

Future value of premiums saved @ 100 0% $74,375.00
Future value of premiums saved @ 100 3% $128,481.92
Future value of premiums saved @ 100 5% $191,930.65
Future value of premiums saved @ 100 7% $293,753.37


Current Age 30
Term till 100

Yearly premium $1,465
Monthly premium $122
Total Premiums paid $102,550

Don't think you should calculate this way also. It should be to calculate the savings of buying 65Term instead of 100Term:
Based on 5.07%pa opportunity cost


Year Year of saving Premium Saved Future value of cumulated premium saved
1 Jan-14 660
2 Jan-15 660 1353.46
3 Jan-16 660 2082.08
4 Jan-17 660 2847.64
5 Jan-18 660 3652.02
6 Jan-19 660 4497.18
7 Jan-20 660 5385.18
8 Jan-21 660 6318.21
9 Jan-22 660 7298.55
10 Jan-23 660 8328.58
11 Jan-24 660 9410.84
12 Jan-25 660 10547.97
13 Jan-26 660 11742.75
14 Jan-27 660 12998.11
15 Jan-28 660 14317.12
16 Jan-29 660 15702.99
17 Jan-30 660 17159.13
18 Jan-31 660 18689.10
19 Jan-32 660 20296.64
20 Jan-33 660 21985.68
21 Jan-34 660 23760.35
22 Jan-35 660 25625.00
23 Jan-36 660 27584.19
24 Jan-37 660 29642.71
25 Jan-38 660 31805.60
26 Jan-39 660 34078.14
27 Jan-40 660 36465.90
28 Jan-41 660 38974.72
29 Jan-42 660 41610.74
30 Jan-43 660 44380.41
31 Jan-44 660 47290.49
32 Jan-45 660 50348.12
33 Jan-46 660 53560.77
34 Jan-47 660 56936.30
35 Jan-48 660 60482.97
36 Jan-49 1465 65014.46
37 Jan-50 1465 69775.69
38 Jan-51 1465 74778.32
39 Jan-52 1465 80034.58
40 Jan-53 1465 85557.33
41 Jan-54 1465 91360.09
42 Jan-55 1465 97457.04
43 Jan-56 1465 103863.12
44 Jan-57 1465 110593.98
45 Jan-58 1465 117666.09
46 Jan-59 1465 125096.76
47 Jan-60 1465 132904.17
48 Jan-61 1465 141107.41
49 Jan-62 1465 149726.56
50 Jan-63 1465 158782.69
51 Jan-64 1465 168297.97
52 Jan-65 1465 178295.68
53 Jan-66 1465 188800.27
54 Jan-67 1465 199837.45
55 Jan-68 1465 211434.20
56 Jan-69 1465 223618.92
57 Jan-70 1465 236421.40
58 Jan-71 1465 249872.96
59 Jan-72 1465 264006.52
60 Jan-73 1465 278856.65
61 Jan-74 1465 294459.68
62 Jan-75 1465 310853.79
63 Jan-76 1465 328079.08
64 Jan-77 1465 346177.69
65 Jan-78 1465 365193.90
66 Jan-79 1465 385174.23
67 Jan-80 1465 406167.56
68 Jan-81 1465 428225.26
69 Jan-82 1465 451401.28
70 Jan-83 1465 475752.32
71 Jan-84 1465 501337.96



Sidenote1: This is an interesting perspective of reasoning out WHY TO BUY TERM. All along, my reason is simple - to insure against loss of income. This can be a good reason to buy term. I'm not against it.
At most, use a knife and stab in your chest at 100yo, if you are so long-lived, hor?

 

[wts2013]

i just shared my experience today in another thread, thought I shld share with u also, also repeat below in case u never read the other thread:

Insurance focus on our fear and greed. I've never bought any insurance which does not give me any surrender value, other than the no choice incomeshield (100% covered), then the elderdershield, etc. Buy what u can afford to pay, add on as your income increase tho the premium will be higher as we age.

What if we are still alive and ok when we reach 55 or retire? If there is surrender value, the insurance become our retirement funds. If no SV, insurance becomes your liability/expense instead of asset/savings.

I've multiple critical illness policies so I can terminate one and get the SR for retirement, haha. My life policy is now more than double the premiums I paid, also another source of retirement funds. I can also choose to stop paying premiums and still covered if I cannot afford.

my first and only life policy is 50k with annual premium less than 1k, now SV is more than double premiums paid, no need to buy more cos the assured value increases overtime, haha, where to get such policies now I dun know. Then I buy critical illness policies, etc. All from NTUC Income. Only past few years start to buy other insurers' single premium ones, but majority of such still from NTUC Income, where to get Income Growth Plan, no more liao.

forgot to mention, last time auto covered under term plan under CPF for 46k, haha, so no need to buy more term plan lor.
Understand the garment stop DPS at age 60, why are u buying till 99? I'm was thinking of stopping to save more than $200 pa in medisave, now I know it autostop at 60, just leave it.

dun forget, u have to think of affordability when u retire, can u afford to continue to pay till 99, when after retire, u would want money for comfortable retirement. dun forget the basic purpose of insurance. dun forget when u retire, u will have money in CPF, insurance, investments, property, etc to pass on.

 

[Mecisteus]

Don't think you should calculate this way also. It should be to calculate the savings of buying 65Term instead of 100Term:
Based on 5.07%pa opportunity cost

Yes. I am doing the same thing with yours. My data till 65 years of age are correct. But >65 onwards are wrong.

I will correct my table.

Interestingly, you have taken 5.07% pa ?!

But still at lower opportunity cost, the FV of premiums saved are unlikely to exceed the 500k payout.