Is PremierLife Generation III (OCBC) a good product for wealth accumulation and retirement plan?

Hi Anon,

did a quick search of the plan online and ran some numbers. Based on the example OCBC have on the site, your annual return is about 3.65% (garuanteed(1.65%) and non-Garuanteed). The returns and control over the liquidity of your funds is limited. lMHO, I would buy term insurance and invest the rest with one of the robo investing platforms. Cost of insurance is much lower and your potential gains from the market over 10-20 years is much higher (6% average).

I'm not a financial planner nor analyst but I have a leveraged term-life and these are my thoughts. Presumably the leverage up comes from the difference between the interest on the 250k loan and the final payout on the additional 250k of plan that you purchase. Given current low interest rates, I'm guessing that you should be able to get an interest rate of +-3%. From what I understand, insurance products generally offer a low annual return of about 4% or so, because of the lower risk compared to investments. The illustrations of 2.75% and 4.5% that you see is NOT the return that you get, but the numbers in the column is what the return (which is lower) would be if the insurance company gets a return of 2.75% or 4.5% on its own investments using your money. So you are effectively getting just about about 1% or so about your loan interest, for the 250k. This is "free returns" but can continue only if interest rates continue to be very low. Even at 1.5 to 2% free returns per year on the 250k, that is a very low return for the risk of taking on a 250k liability. If the 6.5% is the total return on the 100k cash (and not the total 350k invested) you actually come up, then its an incredibly low return for taking on a 250k liability and locking your funds for 10 years. There are better means to leverage out there, but first you have to lower your borrowing costs. ​​​