21 Jun 2020
My parents bought a whole life policy 23 years ago for me and I would like to get some advice on policies that were purchased a long time ago. Would older policies have higher accumulated bonuses?
I am a 23/C/M with a whole life policy + CI coverage from NTUC Income. I managed to get the policy document reprinted recently. However, there was no illustration for the death/ surrender/ bonuses as compared to the more current policies. I would like to find out if older policies (20y ago) would have higher accumulated bonuses as this would help me decide if it is worth keeping as it kind of double ups as a endowment/ saving plan. Current netasset value of 36k, with total paid premium of 23.5k.
You are correct. Older policies would have higher accumulated bonuses. As the bonuses are paid out upon a claim, these policies would have an increasing payout value over time.
The policy document is separate from the policy illustration. You can call in to the hotline to request for a copy of the most recent policy illustration and it will contain the numbers you are looking for.
I highly recommend that you keep the policy due to the CI coverage and the compounding bonuses. Since the premiums are level, eventually when you retire, it should be a small amount compared to the costs of living then. With proper planning, you should not have any issue paying off the premiums even in retirement. However, as the policy was bought 23 years ago, you need to evaluate your situation now to see if the coverage amount is still sufficient for your needs, especially if you are working or about to start work.
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The net rule of thumb is - the longer the participating fund is held, the better the returns. A plan purchased 20 years ago would give you a very good IRR. I would not suggest you replace it. Ask for a revised benefit illustration, and compare it with a brand new whole life/term plan to make a better decision. Most whole life policies can be converted as you reach retirement, that will help you avoid the paying in perpetuity problem.
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Generally the longer you hold, the more bonuses declared and the value grows over time, provided pay...
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