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AXA Inspire Flexi Protector
10 Nov 2013 (149 views)

RATING: AVOID

This is an investment link policy.

The Benefit Illustration (see PDF below) shows a monthly premium of $100 invested in the Asia Growth Fund. The insurance amount payable on death, terminal illness or permanent disability is $100,000.

The value of the accumulated premium, based on a projected yield of 9% is $146,600. The non-guaranteed cash value is only $68.700 or about 47% of the accumulated premium. The Effect of Deduction is 53% of the accumulated premium.

I normally advice consumers not to invest in a life insurance policy where the Effect of Deduction is more than 20% of the accumulated premium.

If the consumer buys a term insurance policy to provide the same coverage, the premium is probably less than 10% of the premium that is being paid to this policy. The remaining 90% of the premium can be invested to earn a better return than the cash value.

Why invest in a policy where you get back less than 50% of the accumulated premium, when you could get back 90% when you invest on your own?

The non-guaranteed cash value, based on a yield of 4% and 8% is $36,500 and $68,900 respectively. The following table shows the accumulated savings if you invest 90% of the premium on your own in an index fund, e.g. the Straits Times Index ETF, to earn a similar yield:

Annual savings Yield Amount after 30 years
1080 4% $60,571.73
1080 8% $122,345.87

For advice on how to buy a term insurance policy and invest the remainder of the savings in an index fund, you can see a consultant listed here.

 

 



AXA Inspire Flexi Protector
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RATING: AVOID

This is an investment link policy.

The Benefit Illustration (see PDF below) shows a monthly premium of $100 invested in the Asia Growth Fund. The insurance amount payable on death, terminal illness or permanent disability is $100,000.

The value of the accumulated premium, based on a projected yield of 9% is $146,600. The non-guaranteed cash value is only $68.700 or about 47% of the accumulated premium. The Effect of Deduction is 53% of the accumulated premium.

I normally advice consumers not to invest in a life insurance policy where the Effect of Deduction is more than 20% of the accumulated premium.

If the consumer buys a term insurance policy to provide the same coverage, the premium is probably less than 10% of the premium that is being paid to this policy. The remaining 90% of the premium can be invested to earn a better return than the cash value.

Why invest in a policy where you get back less than 50% of the accumulated premium, when you could get back 90% when you invest on your own?

The non-guaranteed cash value, based on a yield of 4% and 8% is $36,500 and $68,900 respectively. The following table shows the accumulated savings if you invest 90% of the premium on your own in an index fund, e.g. the Straits Times Index ETF, to earn a similar yield:

Annual savings Yield Amount after 30 years
1080 4% $60,571.73
1080 8% $122,345.87

For advice on how to buy a term insurance policy and invest the remainder of the savings in an index fund, you can see a consultant listed here.