Asked by Anonymous
Asked on 21 Aug 2018
If you believe in the saying - don't put your eggs in one basket, you should get a savings plan from an insurance company. There're 5 asset classes - cash, property, equities, bonds and commodities. In the world today where nothing seemed to be certain, best to have your savings/ assets spread across different instruments.
Personally I use PruWealth as part of my retirement plan for the following reasons:
flexible to withdraw varying amounts after 20 years
limited payment term - I chose to pay off this policy in 10 years
Okay, so PruWealth is what we financial planners like myself in the industry like to refer to as a perpetual savings plan. Most insurance companies have a model that works by saving a yearly or monthly amount for a certain amount of time, then it matures a certain amount of time later 10 year term, 15 year maturity for example.
PruWealth actually revolutionized the savings plan back in 2015 because they offered a perpetual, little to no insurance option that generates significantly higher returns than a maturity endowment plan across time. Its also capital guaranteed after a certain amount of years.
Another thing is that it's guaranteed issuance. Most endowments/savings plans by other companies had a significant upfront insurance amount, and as a result - I found that many of the special needs prospects I had were unable to purchase long term savings plans, which was really unfortunate. One mother in particular wept about it when she told me about this back in end 2016, having tried and been rejected by a few insurance companies due to her son's condition.
So to address PruWealth specifically, I'd say it's a pretty 'decent' plan.
That being said, new plans have entered the market - competition being the way it is. There are improved variants around already, such as Manulife's ReadyBuilder, that have higher projections, higher guaranteed percentages and earlier capital guaranteed amounts. Such endowment plans, while typically inferior to investments in terms of sheer yield over time and this is my speciality, so I know what I'm talking about, are decent plans for the conservative investor or the one who is planning for their children's education or even grandchildren's.
If you'd love to consider similar and better options to PruWealth but with the same beneficial structure, you can always send me a message, and we can meet up after the 1st of September. :) https://www.facebook.com/luke.ho.54 I'd love to be the one to help you out.
The savings plan from an insurance company are actually endowment plans. They are like savings that can help towards your retirement goals. However, you need to commit to a number of years and you may even get back lesser money compared to what you have put in if you withdraw earlier. I would personally prefer Singapore Saving Bond where you can withdraw anytime without any penalties.
Hi there, i think i missed out this question that is meant for me during the AMA.
I think you can listen to what Luke said about what it is. From my interpretation, Pruwealth looks like a long term endowment that is pretty long. It guarantees that you will earn back your principal at the 20 year mark. From the brochure it does not seem to be distributing cash flow but i think at any time after a certaintime, you can draw down your policy for it.
My thought is that this is a savings plan. Some of the folks here will say its not guaranteed and all but then if you put it in a robo advisor, you invest yourself, unit trust or STI ETF, those are not guaranteed as well.
From the way its structured it is likely you will get about 2-4% in savings return. You have to ask yourself whether that is good enough for you. Endowment plans is such that for the first few years, you are locked in, and if you surrender, you are going to lose money. Are you ok with that configuration? If not then perhaps this is not for you.
I think that as a form of savings with a rough 2-4% returns its not too bad.
I got round the idea these stuff is out to fleece you, because there are folks that I cannot help to build up competency. this is a better stuff than a lot of poison i can think of. Would I get somethign like this myself? No I would not.
As always, you have to see whether it has a place in your overall wealth plan
Hope this helps.
i think there are better investments out there that give better returns and provide more liquidity.
For me an endowment plan‘s Time frame is too long and returns are too low.
things get sticky if you are not able to pay the annual or monthly dues as well.
Most Insurance companies offer similar savings plans such as Pruwealth.
Such savings plan are useful for long term savings at a lower return of 3 - 4% but does not offer much liquity for the first 10 to 15 years.
Depending on your investment profile and overall investment strategy, such plans can form the low risk portion of your entire portfolio.
Its hard to provide proper advice without having a look at your overall portfolio. If you would like a more holistic review of your holdings, do drop me an email at [email protected] and i would be happy to assist