Wholelife vs BTIR

[wts2013]

Let's be objective with makav31i's example, let me modify a bit for discussion purpose:

Assumptions:
1. wholelife policy $150 per mth vs BTIR $50 term/$100 invest
2. average return for wholelife policy is 4% pa
3. average return of BTIR invest 7% pa
4. policy life 25 years

(if someone can give coverage for wholelife of $150 and equivalent coverage premium for term from an insurer that would be more "realistic" for comparison)

Using the calculator available from internet:

Wholelife: total premiums paid = 45k, maturity value $77,961, interest = 32961

BTIR: total premiums paid 15k, invest capital = 30k, invest maturity value= 81,211, interest/profit from invest= 51,211, net gain= 51211-15k = 36,211

Looks like only a marginal gain of 36211-32961=3250

Wholelife policies from NTUC Income can pay up to 5% based on real life examples. Pls note that the ultimate average return on a wholelife policy is dependent on a number of factors: amt of yearly premium paid which is lower when u get it young so return will be higher, number of years u hold till maturity the longer the better, who is the insurer, etc

Wholelife policies vs endowment policies shld be looked at separately, objectives and returns are different.

If u compare a BTIR with a "rotten" apple (ie regular premium ILP), of course results will be different. Regular premium vs single premium ILPs have different objectives and returns/performance.

My own assessment since my early 20s when I bought my first NTUC wholelife policy was and still is: NTUC gives the best value for money, lower premiums higher returns. Prudential and other insurers - yaks, high premiums low returns, they never assess properly if the assured can afford, their needs, their existing portfolio before they dump a policy on them, it happened to my sis and my relatives, when I found out, I got them to terminate asap, usually they are already in the second or third year when they approached me, hahaha, they are less educated, not earning much, unable to multitask so dun expect them to BTIR, hahaha

I would say I was lucky to have a good agent to recommend ntuc policies to me, I only have time for my career, working hard to earn as much as possible, hahaha, unfortunately he resigned. oops, there is one more person I must thank, my Dad, he always tell me insurance is pian chiak, dun buy, but I know I need some form of insurance, so I bought something which I will get my money back so it is not pian chiak, did not let him know, he already passed away.

Perisher provided a link to a blog which collects wholelife and endowment policy data to assess their returns, the owner obviously dun know how to compare returns on wholelife policies of various insurers to estimate potential returns or benefits of wholelife and endowment policies.

If u would like to know how various wholelife and endowment policies are performing, why not start a thread so fellow forumers can share what they have, hahaha, start your research/study on it if u are really interested to know how good or how bad they are, hahaha

And for those who are seeking second opinion, pls ask the expert here http://forums.hardwarezone.com.sg/newreply.php?do=newreply&p=96671241

 

[Darkzi0n]

Never buy saving plans from insurer. U can always diy urself something that is able to have a guaranteed portion, insurance coverage, and most probably a better non-guaranteed returns.

 

[Shiny Things]

So since there's a lot of debate in here about whether BTIR really beats a whole-life policy, I took a starting stab at the math over here in another thread.

Anyway, one important starting point is the costs: "$100 a month vs $50 a month" isn't even remotely close to the real relative costs. AXA Direct Purchase is quoting me, for a 24-year-old non-smoker who wants the CI rider:

• $100k of term-to-65 coverage: about $275 a year;
• $100k of premium-to-70 whole-life coverage: about $2180 a year.

That's not a typo: the term policy is nearly 90% cheaper than the whole-life policy.

Incidentally, I think the Direct-Purchase requirements were a great idea, and I want to give a round of applause to AXA for putting their quoting engine online. More companies should do this.

 

[wts2013]

So since there's a lot of debate in here about whether BTIR really beats a whole-life policy, I took a starting stab at the math over here in another thread.

Anyway, one important starting point is the costs: "$100 a month vs $50 a month" isn't even remotely close to the real relative costs. AXA Direct Purchase is quoting me, for a 24-year-old non-smoker who wants the CI rider:

• $100k of term-to-65 coverage: about $275 a year;
• $100k of premium-to-70 whole-life coverage: about $2180 a year.

That's not a typo: the term policy is nearly 90% cheaper than the whole-life policy.

Incidentally, I think the Direct-Purchase requirements were a great idea, and I want to give a round of applause to AXA for putting their quoting engine online. More companies should do this.

hahaha, let's put your figures into the calculator with the following assumptions:

1. Wholelife policy 2180 premium per year, Term 275 per year n invest 1900 per year
2. Wholelife policy average return 5%, BTIR average return 5%
3. Policy term 46 years
4. Ignore the insurer as it is not the best in the market

Wholelife profit $285k
BTIR profit 249k less term premiums 11275 = 237k

 

[Darkzi0n]

hahaha, let's put your figures into the calculator with the following assumptions:

1. Wholelife policy 2180 premium per year, Term 275 per year n invest 1900 per year
2. Wholelife policy average return 5%, BTIR average return 5%
3. Policy term 46 years
4. Ignore the insurer as it is not the best in the market

Wholelife profit $285k
BTIR profit 249k less term premiums 11275 = 237k

How can bitr have lesser profit? Wat is the cost of insurance in ur whole life?

 

[blurblur123]

hahaha, let's put your figures into the calculator with the following assumptions:

1. Wholelife policy 2180 premium per year, Term 275 per year n invest 1900 per year
2. Wholelife policy average return 5%, BTIR average return 5%
3. Policy term 46 years
4. Ignore the insurer as it is not the best in the market

Wholelife profit $285k
BTIR profit 249k less term premiums 11275 = 237k

5% return???? That is just benefit illustration? Why r we arguing over this when it is more possible to make 5% returns on our own?

 

[Perisher]

hahaha, let's put your figures into the calculator with the following assumptions:

1. Wholelife policy 2180 premium per year, Term 275 per year n invest 1900 per year
2. Wholelife policy average return 5%, BTIR average return 5%
3. Policy term 46 years
4. Ignore the insurer as it is not the best in the market

Wholelife profit $285k
BTIR profit 249k less term premiums 11275 = 237k

Like what someone above mentioned, what is the cost of the wholelife, is the 5% nett return? Is there a specific policy you are aiming at? Are most or even 20% of the wholelife policy out there able to do what you have illustrated?

 

[Jazzbie]

I'm not delving into the calculations derived by wts2013 here but I agree on some of his points as my own NTUC life policy bought by my parents for me in the late 90s is doing very well as some has mentioned here.

Current surrender value less premiums paid is around 10% pa in total returns (no adjustment for inflation etc.) while the bonus returns about 5% pa for the yearly premiums now (depends on market performance). I think this is very decent.

I'm not sure in today's context whether such life policy is in place - I doubt so. But if BTIR is not applicable due to an individual's risk appetite, I will also favour NTUC insurance policies as the next alternative.

 

[new-comer]

I think many NTUC plans no longer around? One of my relatives got this NTUC Living Policy, around 8 years break-even. She also got another NTUC plan (forget the name), also around 8 years break-even. Both her plans were bought in the late 1990s.

Envy

 

[wts2013]

hahaha, please read my earlier posts again if u missed some details there http://forums.hardwarezone.com.sg/96676363-post76.html

Most important, bear in the mind the assumptions made in BTIR and Wholelife Policies, when u are comparing and making a decision. If any assumption fails, your case for BTIR or my case for Wholelife also fails, and u will regret when u reach retirement age be it 55, 65 or 70, etc, too late.

So as another forumer mentioned, it not only depends on your risk appetite, it depends on:

1. Can u afford the money, do u have that income to continue to pay for annual premiums and investment for the assumed 46 years
2. Can u or your investment consistently make at least 5% return, or average 5% over 46 years. For wholelife, we rely on the insurer to make the money for us, on average 4-5%.
3. Who is the insurer? I would say NTUC can do it, not sure about the other insurers, also less risk that it will not survive longer than us, hahaha. During the financial crisis, returns were slightly lower, when in good times, bonus can be good to make up, so averaging 4-5%. As I mentioned, the longer u hold, the better the returns, as better returns come in at the later years.
4. When u buy the wholelife policy, the lower your premiums the better the returns.
5. Do u have the time to manage your investments.

It is true that NTUC might no longer offer certain policies with very good returns (so far ntuc had terminated a few good policies where customers get good returns but they are losing money hahaha). NTUC also offer better policies, which I did not evaluate in detail cos I dun need more, such as limited pay ones where u pay say for 20 years but covered for life, just an example, while mine I have to pay until maturity with option to stop of course.

For those who question the 5% return on wholelife policies, it is the net gain, ie maturity value less premiums paid.

As I said, if u are concerned what i quoted is rare, then start a thread for people to share their wholelife policies and study for yourself. Then u might say history does not represent the future, hahaha, its the same with your BTIR where u are using history of 5-7% returns to project the value of BTIR.

I'm just sharing, the choice is yours, I'm not an insurance agent here to sell, but I'm a shareholder of NTUC Income after I became a policy holder, earning passive income from them.

U also need to know Shiny don't buy insurance except for hospitalisation insurance, hahaha

 

[limster]

Like what someone above mentioned, what is the cost of the wholelife, is the 5% nett return? Is there a specific policy you are aiming at? Are most or even 20% of the wholelife policy out there able to do what you have illustrated?

As there are multiple insurance threads, I may have missed it and I think you also asked wts about it, has he actually named the NTUC policy that delivers 5% per year and is currently offered?

Like I mentioned, I'm only aware of NTUC policies like Living Policy which is no longer being offered.

 

[wts2013]

I'm not delving into the calculations derived by wts2013 here but I agree on some of his points as my own NTUC life policy bought by my parents for me in the late 90s is doing very well as some has mentioned here.

Current surrender value less premiums paid is around 10% pa in total returns (no adjustment for inflation etc.) while the bonus returns about 5% pa for the yearly premiums now (depends on market performance). I think this is very decent.

I'm not sure in today's context whether such life policy is in place - I doubt so. But if BTIR is not applicable due to an individual's risk appetite, I will also favour NTUC insurance policies as the next alternative.

wow, u got a very good policy, can share name of the policy and premium per year and any other details, thanks

 

[disavowed]

wow, u got a very good policy, can share name of the policy and premium per year and any other details, thanks

NTUC income wasn't so profit-motivated last time, especially when tan kin lian was ceo. Now different story liao

 

[Perisher]

As there are multiple insurance threads, I may have missed it and I think you also asked wts about it, has he actually named the NTUC policy that delivers 5% per year and is currently offered?

Like I mentioned, I'm only aware of NTUC policies like Living Policy which is no longer being offered.

I don't think wts2013 has mentioned any policy in NTUC now which can achieve what he had before. Not that I have seen any.
His assumption is that most plans from NTUC is good. He seems to favour wholelife over endowment.

If history is anything to go by, would sure like to picked a policy that is still available now and has a history of giving out that 5% he mentioned to compare with BTIR which was and still is available.

I would be glad to be proven wrong and recommend NTUC policy if there is a case where the current available NTUC policy has proven itself but please do be specific.

Most if not all other policy from other insurers though still has that black mark on them unless proven otherwise.

 

[Mecisteus]

I would say I was lucky to have a good agent to recommend ntuc policies to me, I only have time for my career, working hard to earn as much as possible, hahaha, unfortunately he resigned. oops, there is one more person I must thank, my Dad, he always tell me insurance is pian chiak, dun buy, but I know I need some form of insurance, so I bought something which I will get my money back so it is not pian chiak, did not let him know, he already passed away.

hahaha
1) we know you like to buy something that give you back your cash in the future. i think you have repeated many times but ironically you did not understand where the cash value comes from?

hahaha
2) you already stop quoting that your auntie bought this policy yielding 5%? i thought i will see that again.

hahaha
3) why do you let insurance companies to do the investment for you. timing the market can yield potentially higher returns. focus your cash in that strategy instead. it is a waste.

 

[wts2013]

hahaha
1) we know you like to buy something that give you back your cash in the future. i think you have repeated many times but ironically you did not understand where the cash value comes from?

hahaha
2) you already stop quoting that your auntie bought this policy yielding 5%? i thought i will see that again.

hahaha
3) why do you let insurance companies to do the investment for you. timing the market can yield potentially higher returns. focus your cash in that strategy instead. it is a waste.

hahaha, u know what is diversification, hahaha, moi earn alot of money that extra money can still be invested to earn even more, so 2 sources of returns, hahaha, moi dun like people to troll me, people want to know ask properly and nicely, u already read my prior posts, good for u, Perisher actually saw my post on the name of the policy but he got short memory,

hahaha, moi considering starting a thread leh, maybe later, now moi busy making money, hahaha, market opening, hahaha

 

[Mecisteus]

hahaha, u know what is diversification, hahaha, moi earn alot of money that extra money can still be invested to earn even more, so 2 sources of returns, hahaha, moi dun like people to troll me, people want to know ask properly and nicely, u already read my prior posts, good for u, Perisher actually saw my post on the name of the policy but he got short memory,

hahaha, moi considering starting a thread leh, maybe later, now moi busy making money, hahaha, market opening, hahaha

hahaha
that means you are not confident with your own strategy.

hahaha
quite a number of people asked you nice but you didnt reply.

 

[Perisher]

hahaha, u know what is diversification, hahaha, moi earn alot of money that extra money can still be invested to earn even more, so 2 sources of returns, hahaha, moi dun like people to troll me, people want to know ask properly and nicely, u already read my prior posts, good for u, Perisher actually saw my post on the name of the policy but he got short memory,

hahaha, moi considering starting a thread leh, maybe later, now moi busy making money, hahaha, market opening, hahaha

Oh? Will search for it then.

 

[wts2013]

hahaha
that means you are not confident with your own strategy.

hahaha
quite a number of people asked you nice but you didnt reply.

hahaha, good try, moi dun take -ve challenges, hahaha, who cares, so long moi making money now, moi dun bother with what others think, hahaha, when moi not happy or sense no sincerity in the asking, moi will choose not to reply, hahaha

 

[wts2013]

Oh? Will search for it then.

oops, moi deleted already, hahaha, think the post is till there with the name deleted, oops