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The student regretted buying this life insurance policy, resulting in a loss of $1,800 over 4 year. It is a big loss for a young person.
05 Jan 2015 (6 views)  

Hi Mr. Tan,

I am 23 years old and employed. I bought a Pruflexicash policy (25 years maturity) in  2010. I was a student and was offerred this policy during a road show at Bugis Junction. I am paying a monthly premium of $76.

The agent told me that I will be getting at least 3% interest p.a for the money that I invest.  I also get a sum assured of $10,000 and a yearly cash back.I purchased the policy without thinking twice.

Recently I looked at the benefit illustration, I just realised that the guaranteed return is very low compared to the the total premium paid up to maturity. With the small return, I will still lose out due to inflation.

If I were to surrender the policy now, the surrender value is $437 and the cash back is $1550. I had paid a total premium of $3811, so I would have lost $1,800 if I surrender the policy. Should I continue the policy or surrender now?

REPLY

Can you do your own calculation, or get the agent to calculate for you.
 
Forget about what you have lost in the past years. Do a projection over the next 3 years and find out the following:
 
a) How much premium do you have to pay for the next 3 years
b) What is the increase in cash value over the next 3 years, i.e. the cash value at the future date, compared to the cash value now. 
c) Will the increase in the cash value cover the premium that you have to pay?
 
Later, you can project the figures for 5 years. You will be able to make a better decision after you get the figures. 


The student regretted buying this life insurance policy, resulting in a loss of $1,800 over 4 year. It is a big loss for a young person.
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Hi Mr. Tan,

I am 23 years old and employed. I bought a Pruflexicash policy (25 years maturity) in  2010. I was a student and was offerred this policy during a road show at Bugis Junction. I am paying a monthly premium of $76.

The agent told me that I will be getting at least 3% interest p.a for the money that I invest.  I also get a sum assured of $10,000 and a yearly cash back.I purchased the policy without thinking twice.

Recently I looked at the benefit illustration, I just realised that the guaranteed return is very low compared to the the total premium paid up to maturity. With the small return, I will still lose out due to inflation.

If I were to surrender the policy now, the surrender value is $437 and the cash back is $1550. I had paid a total premium of $3811, so I would have lost $1,800 if I surrender the policy. Should I continue the policy or surrender now?

REPLY

Can you do your own calculation, or get the agent to calculate for you.
 
Forget about what you have lost in the past years. Do a projection over the next 3 years and find out the following:
 
a) How much premium do you have to pay for the next 3 years
b) What is the increase in cash value over the next 3 years, i.e. the cash value at the future date, compared to the cash value now. 
c) Will the increase in the cash value cover the premium that you have to pay?
 
Later, you can project the figures for 5 years. You will be able to make a better decision after you get the figures.