A student bought a PruFlexi Cash policy and after paying the premiums for 8 months, he asked my views about terminating the policy.
I asked him to send the benefit illustration to me. The total premium for 3 years would have been $3,600 and the cash value would have been $800, giving a loss of $2,800. If he terminate the policy now, after 8 months, the loss would have been $800. It seemed to be better for him to terminate the policy. The sum insured under the policy was only $15,000.
What was the purpose of buying a policy that offered a miserably low sum insured and resulting in a loss of $2,800 in savings for 3 years? There is a complicated series of cash payments which can be accumulated with interest at 1.5% p.a. After taking all of these payments into account, the yield on the policy looks rather poor. It would have been difficult for a lay person to understand how to evaluate such a policy - as it is quite complicated.
I asked him to check out the facts with the agent, as I could have been missing some essential point. (Note: I have changed some figures slightly, but the essential facts are shown above.)
GENERAL ADVICE
I asked him to send the benefit illustration to me. The total premium for 3 years would have been $3,600 and the cash value would have been $800, giving a loss of $2,800. If he terminate the policy now, after 8 months, the loss would have been $800. It seemed to be better for him to terminate the policy. The sum insured under the policy was only $15,000.
What was the purpose of buying a policy that offered a miserably low sum insured and resulting in a loss of $2,800 in savings for 3 years? There is a complicated series of cash payments which can be accumulated with interest at 1.5% p.a. After taking all of these payments into account, the yield on the policy looks rather poor. It would have been difficult for a lay person to understand how to evaluate such a policy - as it is quite complicated.
I asked him to check out the facts with the agent, as I could have been missing some essential point. (Note: I have changed some figures slightly, but the essential facts are shown above.)
GENERAL ADVICE
It is a bad idea for a student to buy any life insurance policy - as it does not serve any useful purpose. Consumers should also avoid buying any complicated financial product that is difficult to understand.
11 comments:
Yes Mr Tan. Because of you, I am able to decide for myself how to buy the best value for money insurance policy. My friends who are agents were surprised and annoyed by the level of knowledge I had, that they could earn much from me.. I like that..
Prucash and revosave are anticpated endowment products.They are both rip off products that don't add value. They are worse than saving in the bank FDs.Yet they push as better than banks FDs. Comparison with bank FDs is made ILLEGAL by MAS last year.Yet NTUC agents are using FDs as comparison.
Only agents without conscience would push such products to friends , relatives and other people.
In the past during your tenor ntuc agents used to condemn Prucash as scam but now they push their revosave more fiercely than the Prucash agents. What hippoctrates!!! Why? money, lah!!!!Money makes the world go round.It makes people throw away values and conscience.
Poor old TKL. With his generous advice given to daft people like us, based on tons of experience at his former Company NTUC Income, anyone connected with Insurance must be fuming mad at him, ready to run him down at the slightest opportunity.
So people either love him or hate him.
Guess the PAP Govt has all along been trying to do him in, as he is always a non-conformist rebel from his days as CEO of Income.
As controversial as ever, and we like it this way.
Anon November 01, 2011 9:46 PM,
Yes, ntuc agents are pushing this dubious product and using bank FDs as comparison. You must report them to MAS for flouting the law.
PruFlexiCash is an anticipated endowment, with annual cash coupon after the second policy anniversary.
There is a lump sum at maturity, and annual cash coupon at 5% Sum Assured. Option to leave it with the Insurer will accumulate at 3% pa. (5% does not means your money is growing at 5% nor 3% means 3%)
The avg return for this AE is probably 2.5%, which is usually lesser than regular premium. AE has the flexibility for withdrawal (cash coupons are like advance sum assured), and even till the last yr if a claim is filed, the whole SA will be paid out.
2.5% is better than 0.1 and lesser than 20% - it will be good for some, bad for some. Important is knowing what you're getting into.
Anyway, if anyone is terminating their endowment policies (regular premium, anticipated with 15 or lesser yrs remaining, we can pay more than the Insurance Company for your policies, transfer policyownership, and continue premiums until maturity.
Yesterday I was at AIA when I overheard the next counter surrendering a 21 yr endowment. Looking forward to LIA and MAS requiring the Insurers to inform surrendering policyowners that they have an option to transfer/assign/sell (for a higher amount).
Cheers
Micky Neo
Resale Endowment
www.repsholdings.com.sg
It is ONLY 1.2% return!!!!!!!day light robbery. Only conmen and women would rob their fellow human beings.
They can enjoy the ill gotten money in hell.
Please stay away from Prucash or revosave or any anticipated endowment.They are all scam.
Thank you for mentioning this insurance as i got agent want to sell to me this insurance which i totally no clue at all.
You need to take a look at the Benefit Illustration before you create such a blog post. An endowment plan has high distribution costs in the first few years, and the maturity value is based on the average market returns, for the past 10 years, not lower than 3% p.a. on average.
An endowment is a long term commitment. If your intention is to terminate after 3 years, please stay far away, because no agent will want to sell this policy to you.
Tan Kin Lian, please get your facts right before posting a post like this. I understand that this might be very new to you. You can speak to any Prudential Financial Consultant to find out more.
Dear Mr Tan
I was reading your previous posts on PruCash but didnt find the answers I want.
I have been paying premium for the PruCash Max Limited Pay since 2012 but right now I am unemployed and find it difficult to keep up the premium payment. I want to terminate it but was told I can only get back 50 % of the premium I paid (approx $12,000 out of the $22,000 premium I paid for the past 3 over years).
Does it make any sense to continue with the policy or should I just forgo the loss of 50% of my premium payment.
I'm 58 years old and policy maturity is at 65 years old. I was told by the agent that I do not need to pay premium after a few years but Prudential office say there's no such thing.
I refused to talk to the agent which was based at Stanchart Bank at ION because her attitute was bad when she heard my intention to terminate the policy. I told her she misled me but she was adamant she didnt and did no wrong.
I can't recall exactly what happended (no evidence) so I'm not sure if I can asked for full refund by saying the agent misled me.
What is your advice?
Much appreciate your reply. Thanks
Hi, if you really signed up for a PruCash Max Limited Pay for 3 years, you will be able to withdraw some money buy now, which may help you to continue the plan, as you will definitely suffer a huge loss if you cancel the plan now
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