RATING: AVOID

This is a whole life policy with premium payable for 20 years.

The Benefit Illustration (shown in the PDF below) is for a male age 36 paying an annual premium of $1,450 for 20 years. It covers a death benefit of $100,000.

The surrender value of the policy at the end of 40 years is around 50% of the accumulated premiums. The "Effect of Deduction", which is the amount taken away from the accumulated premium is about 50% of the accumulated premium. This is too high. I normally advise consumers not to take up any policy where the deduction is more than 20% of the accumulated premium.

If the policyholder buys a decreasing term assurance policy to cover $100,000 for 40 years, the cost of the policy is likely to be about 10% of the annual premium. If the remainder of the annual premium is invested in an index fund to earn to earn the same yield as projected, the accumulated savings would be much higher than the cash value.

The cash value of the policy at the end of 40 years is between $38,000 to $60,000 based on the projection.

If 90% of the premium, i.e. $1,305 per year, is invested to earn a yield of 3% to 5%, the accumulated savings at the end of 40 years would be::

Annual savings | Yield | End of 20 years | End of 40 years |

$1,305 | 3% | $36,118 | $65,233 |

$1,305 | 4% | $40,415 | $88,554 |

$1,305 | 5% | $45,309 | $120,217 |

It is better for the consumer to buy a term insurance policy and invest the rest of the premuim in an index fund. Refer to one of the consultants shown here.

The distribution cost of this policy is $2,215, which is 153% of the annual premium. This is rather high. It is the amount that is taken away from your savings to pay the commission to the agent and other marketing expenses.

I give a rating of "AVOID" due to the high "Effect of Deduction".

Tan Kin Lian

RATING: AVOID

This is a whole life policy with premium payable for 20 years.

The Benefit Illustration (shown in the PDF below) is for a male age 36 paying an annual premium of $1,450 for 20 years. It covers a death benefit of $100,000.

The surrender value of the policy at the end of 40 years is around 50% of the accumulated premiums. The "Effect of Deduction", which is the amount taken away from the accumulated premium is about 50% of the accumulated premium. This is too high. I normally advise consumers not to take up any policy where the deduction is more than 20% of the accumulated premium.

If the policyholder buys a decreasing term assurance policy to cover $100,000 for 40 years, the cost of the policy is likely to be about 10% of the annual premium. If the remainder of the annual premium is invested in an index fund to earn to earn the same yield as projected, the accumulated savings would be much higher than the cash value.

The cash value of the policy at the end of 40 years is between $38,000 to $60,000 based on the projection.

If 90% of the premium, i.e. $1,305 per year, is invested to earn a yield of 3% to 5%, the accumulated savings at the end of 40 years would be::

Annual savings | Yield | End of 20 years | End of 40 years |

$1,305 | 3% | $36,118 | $65,233 |

$1,305 | 4% | $40,415 | $88,554 |

$1,305 | 5% | $45,309 | $120,217 |

It is better for the consumer to buy a term insurance policy and invest the rest of the premuim in an index fund. Refer to one of the consultants shown here.

The distribution cost of this policy is $2,215, which is 153% of the annual premium. This is rather high. It is the amount that is taken away from your savings to pay the commission to the agent and other marketing expenses.

I give a rating of "AVOID" due to the high "Effect of Deduction".

Tan Kin Lian