A policyholder asked for my views about the Max Enhanced Growth policy that be bought 8 years ago.
He sent the benefit illustration to me.
Here is my analysis.
The annual premium is $17,200 and is payable for 10 years.
For the last 5 years, there is a guaranteed SB payment of $17,200 which can be used to pay off the premium due. So, the policyholder is only required to pay $17,200 for 5 years, giving a total premium of $86,000.
The maturity benefit consisted of $74,787 (guaranteed) plus a non-guaranteed portion of $22,884 giving a total of $97,671. This is $11,671 more than the total premium paid for 5 years.
Considering that the premium was paid during the first 5 years and the maturity benefit is paid at the end of the 10th year, the return is about 1.6% p.a.
I consider this return to be poor, but it is the nature of the contract.