POSB ManuRegular Payout better than CPF?

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...)

Related post:
Sumiko Tan's expensive lesson.

Buy term life insurance till age 65 or 99?

Reader:

Hi AK.
I asked my insurance agent about Term Life insurance after seeing the post on 1mil coverage on $41/mth.


He suggested to me, "Bro, if u r looking at $1mil, might as well go for till age 99. It's more expensive but at least won't waste the premiums paid and most likely the sum assured will be payable."


Can you advise me on whether to cover till 65 or 99?


I'm 34 this year, married with 1 child. Wife is also working.
Thank you.

 

AK:

ROFL

Insurance agent also need to tan jia... ;p

Reader:

Hahahahaha ya that's what I thought.

Cuz I was aiming for 65y.

AK:

Waste premium paid? 

You waste premium paid when you buy insurance when you don't need it anymore... ;p

Pay for what you need.

Reader:

👍🏼 understood. Thank you very much for the reply!

Really enjoy and learn a lot from your blog. 

Especially on cpf issues.


 

AK:

Aiyoh. I anyhow talk to myself de.

For fun and laughter.

Glad you enjoy.

Mortality risk goes up as we age. 

Life insurance becomes a lot more expensive in our golden years. 

It is only reasonable.


Want to be stunned like vegetable? 

Go see how much more we have to pay for term life insurance from ages 65 to 99. 

More shocking than watching a horror movie.







What happens if money not enough to pay for the sky high premium from ages 65 to 99? 

Tell our family to pay? 

Insured to family,

"When I die, the death benefit of $1m will go to all of you. Pay the premium for me, OK?"

Family to insured,

"Wah! What if you live to age 100 and what if we die before you? You think what? Buy insurance is like buying lottery har?"

"You cancel that whole life insurance policy!"





Continue paying for term life insurance when we no longer have dependents in the hope that our family will enjoy a windfall from our death?


Macabre.


Remember, we want to transfer risk to insurance companies but as there is a price to pay for insurance, buy only what we need.


OK lah, if you have money oozing out from your nose and ears, ignore me and go buy whatever you want. 

I am going back to my well.







Related posts:
1. $1 million term life insurance for $41 a month.
2. Term life insurance: How long a term?
"Insurance loses it cost effectiveness after a person is in his 60s and 70s. The cost of life insurance will rise exponentially because the probability of dying also rises exponentially."