I have a Whole life with profits , 2nd series insurance (Prudential), which has been in force since 1990. I am wondering whether I should just surrender the policy to benefit from the cash? - Seedly

Insurance

Asked by Anonymous

Asked on 04 Jul 2019

I have a Whole life with profits , 2nd series insurance (Prudential), which has been in force since 1990. I am wondering whether I should just surrender the policy to benefit from the cash?

I am not in dire need of the cash but am wondering why I need to continue paying an annual premium (more than $2000) for so many years. Will it make sense to get the cash and invest in other insurance-linked policies to enjoy the cash inflow?

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Your policy right now is almost entering it's 30 yr period. This means that it would have broken even by now and everytime you pay a premium, the policy could be earning a 6-7% return.

Because there's a compounding effect on the policy, I suggest you calculate the projected year on year returns from this year onwards. It may be the best low risk product to own at the moment.

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Hariz Arthur Maloy
Hariz Arthur Maloy

05 Jul 2019

Well it is still an insurance policy with a death benefit as its selling factor. So only choose to withdraw from it when you really require the money. And when you do, you can still make a partial surrender instead of a full one to allow money in the policy to still grow. Lastly, you can convert the policy to a paid up policy and not pay premiums on it anymore if you desire.
Jackie

5d ago

That depends if you want to let the insurance companies use your money to earn more money or you prefer to sell and put the money elsewhere to earn high income or for your own use. You can even buy a million dollar death benefit policy if you’re concerned on the death benefit. Not an agent myself but I believe AIA has one such policy

If you do not need the cash, I wouldn't suggest taking it out. Unless you have other ideas of where to invest the money. And since it is in profit, you can treat it like a plan that still provide you with coverage and at the same time earn a higher interest than your savings account. When you reach the age range of about 65 to 70 and you do not need the coverage anymore, surrender the policy if you would like to use the cash for retirement purposes. Or leave it to the next generation as legacy.

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Mary George Cheriyan
Mary George Cheriyan

10 Jul 2019

This is so helpful 👍. I will just need to study the coverage again myself. Insurance agents are bafflingly unhelpful. My agent even commented that it's unusual for policy holders to track and inquire into policy coverage and benefits! Others have been blithely apathetic.
Vincent Tan Wen Bin
Vincent Tan Wen Bin

11 Jul 2019

Thank You!
Alan Kor
Alan Kor
Level 5. Genius
Answered 6d ago

So you brought a whole life plan for investment?

have you calculated your irr?

seeing the agents' answers below are very entertaining lol

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Eric Chia
Eric Chia, Senior Financial Consultant at Prudential
Level 4. Prodigy
Updated on 04 Jul 2019

If you are not in need of cash, why would you surrender your policy, and put the cash which you have faithfully accumulated over the years in investment risks?

If you bought the policy for protection, shouldn't you be keeping the policy, or have your family situation/life stage changed that you felt the protection is no longer needed?

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佩珊
佩珊

04 Jul 2019

I’m oso facing the same plan.now I needed a cash pay many thing this plan holding me about 4k now my bank acc totally is 0 amount

Most whole life policies returns plateau at age 70. So that is a good thought if you are not looking into the death benefit.

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