Prime Reward from Great Eastern Life.
01 Jan 2015 (22 views)

1. The guaranteed payout of $5,250 a year over 10 years for a single premium of $50,000 gives a yield of 0.47% p.a. This is extremely low.

2. The projected payout of $6,970 gives a yield of 3.26% p.a. This is based on the prevailing accumulation rate of 3% p.a. and is not guaranteed. They can change the accumulation rate according to their discretion and the policyholder cannot object to it. Can you trust them to give you a fair accumulation rate over the 15 year period?

3. An alternative way is for you to "invest on your own" in the $50,000 in an index fund and earn the market return. Over the 15 years, it is quite safe to project an annual return of (say) 5% per annum. The table below shows the balance that is available to you at the end of 15 years, assuming that you made the same withdrawal of $5,250 or $6,970 as shown in the GEL plans.

4. The GEL plan give you a net balance of $0 after 15 years. The "invest on your own" plan gives you a balance of $37,912 or $16,278 after 15 years, and after making the same yearly withdrawal projected under the GEL plan.

5. The "invest on your own" plan has the risk that the return is not guaranteed. The GEL plan has the same risk, as the "accumulation rate" is also not guaranteed. If the index fund earns a lower return, the accumulation rate is likely to be lower as well.

Click the PDF below to view the brochure of the GEL Prime Reward policy.

1. The guaranteed payout of $5,250 a year over 10 years for a single premium of $50,000 gives a yield of 0.47% p.a. This is extremely low.

2. The projected payout of $6,970 gives a yield of 3.26% p.a. This is based on the prevailing accumulation rate of 3% p.a. and is not guaranteed. They can change the accumulation rate according to their discretion and the policyholder cannot object to it. Can you trust them to give you a fair accumulation rate over the 15 year period?

3. An alternative way is for you to "invest on your own" in the $50,000 in an index fund and earn the market return. Over the 15 years, it is quite safe to project an annual return of (say) 5% per annum. The table below shows the balance that is available to you at the end of 15 years, assuming that you made the same withdrawal of $5,250 or $6,970 as shown in the GEL plans.

4. The GEL plan give you a net balance of $0 after 15 years. The "invest on your own" plan gives you a balance of $37,912 or $16,278 after 15 years, and after making the same yearly withdrawal projected under the GEL plan.

5. The "invest on your own" plan has the risk that the return is not guaranteed. The GEL plan has the same risk, as the "accumulation rate" is also not guaranteed. If the index fund earns a lower return, the accumulation rate is likely to be lower as well.

Click the PDF below to view the brochure of the GEL Prime Reward policy.