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Reader says...
I am a new reader to your blog and was awestruck by the tons of wisdom and knowledge contain in your blog.
How I wish I could have come across your blog sooner.
I have a question which I wish to seek your advice.
I chanced upon a POSB roadshow that is selling this product: ManuRegular Payout
(https://www.posb.com.sg/personal/insurance/savings-with-protection/rsp/manuregular-payout?pid=sg-posb-pweb-insurancehome-featureproducts-insurance-manuregular-payout-btnlearnmore)
As seen on the website, the relationship manager claimed that the total GUARANTEED (yes, he used that word) benefits is S$98,352.
This is more than the premiums that I will pay (assuming if I sign up the plan).
Moreover, the premiums I paid will be capital GUARANTEED as well!
I will also be eligible for higher bonus if I put back the annual fixed cash benefits rather than withdrawing them.
I did a simple maths and compared it with putting the money in my CPF's SA.
For a period of 13 years, with interest rate at 5% and that I deposit an annual amount of $7834, the benefits I get for these 13 years is only S$36,038.
This is much less than what the benefits that the bank GUARANTEE me through the above product.
Sensing all these to be too good to be true, I asked the manger what is the catch?
He replied that the only catch is that I cannot surrender the policy within the next 15 years, but I will get back less than the premiums I paid.
Furthermore, there is no "premium holiday" available and I will have to pay the premium every year without fail.
However, I feel that there is more to this than what the manager simply claims.
As such, I wish to seek your wise advice.
Is there anything I should watch out for?
Should I buy this product?
P.S: I am a fresh graduate earning S$3500/month (before CPF).
AK says...
I clicked on the link you provided and read the footnotes:
"1. You can accumulate the Fixed Cash Benefits with Manulife at a non-guaranteed rate of 3% per annum (at the projected rate of return of 4.75% per annum).
"The interest rate is subject to change with 30 days’ advance notice to policy owner."
See the words "non-guaranteed" and "projected"?
"4c. ... As bonus rates are not guaranteed, the actual payout may vary according to the future performance of the Participating Fund..."
Again and "actual payout may vary".
Remember, don't ask barbers if we need a haircut.
No one cares more about our money than we do.
(Alamak! I am a DBS shareholder now. I should have kept quiet...)
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Sumiko Tan's expensive lesson.
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