Should i cancel pruflexicash series 7?

Hi i have an ongoing savings policy with Prudential (Pruflexicash) since 2014. It is set to run for 25 years until 2039. Every month i am paying $140 and it has a cashback benefit with $1k yearly.

i have withdrew less than a few times for some commitments.

Recently, i had a review with my agent and i got to know that i will be getting about $41k upon maturity if i choose to not withdraw anymore. However if i still choose to withdraw each year, i would be getting around 20k++.

My agent is asking if i would want to surrender this policy at $2.5k and change to a investment policy with a premium at $150/mth for 25 years, where she said that the returns will be better and there will be dividend instead of cashback benefit. This dividend would be better off to put it back to the account to roll.

May i get some advice on this? Thank you.

Discussion (11)

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Anthony Liew

10 Jul 2024

First of all, you have to ask yourself what is the financial objective of this anticipated endowment. typically an endowment plan that lasts 25 years nowadays is way too challenging for the insurers given the low interest rate environment. investment comes with risk and you have to assess your risk profile. monitoring of the investment is also a key component to investment success.

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Eddy

Edited 22 Jun 2024

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tinycents

10 Jun 2024

Surrender policy will lose money leh, then buy new policy the agent will get new benefit and productions for their awards. sounds like a bad idea. just keep the policy. if u got extra money, then buy the new policy to accumulate more retirement funds. better for u in the future. why need to cancel and buy new. why not keep and buy.

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Elijah Lee

10 Jun 2024

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

I would think that you might first want to consider your long term goals for this policy first. Of course, it is also likely that your goals might have shifted in the 10 years that have passed.

Switching your policy would be something that you should not take lightly.

Furthermore you will need to understand that a savings policy has a guaranteed component and a variable component, but there is at least a level of safety with it.

With an investment linked policy, there are no guarantees of any sort. The returns may potentially be better as mentioned, but it is by no means guaranteed at all.

The current premium for your savings plan should be something you can manage, so if you truly would like something that is safe and guaranteed I would say that you should continue to commit to the savings plan. You very likely have not reached break even yet.

There is no need to commit to something else just because of the fear of missing out on higher gains. And in fact I would use the cash back to fund any situation where I might have need for liquid cash for sudden commitments. Else, I would reinvest the payout. It's never a bad idea to have a pot that you can draw on.

Also, I would not not take the cashback to buy another plan, whether it is an ILP or another savings plan/annuity/endowment. This is just me, but I don't think I want to create another commitment for myself out of nowhere. If I truly had the cashflow to get another plan, then I would fund the new plan out of the cash flow that I have, not out of an anticipated cashflow from an existing policy that I might need to use for other purposes in the future.

And lastly, if you want to invest, there are probably ways to do it on your own, instead of through an investment linked policy. Even if you don't want to go through the hassle of managing it, you can always engage an advisor to manage it outright, instead of via a policy.

Some added info:

On protection based ILPs, I share my thoughts here.

On investment based ILPs, I share my thoughts here.

Those views, broad, have not changed much over the past 3 years since I wrote that.

All the best.

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