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Anonymous

22 Aug 2019

Insurance

Should we surrender the PruWealth Plan?

My other half bought a PruWealth Plan (SGD) in 2016 June and will have to pay $300 monthly for 10 years. Should I ask her to surrender and invest the monthly $300 in stocks, ETF or others instead? Even SSB at 2% yearly is better than this. She couldn’t give me any info when I asked for more info so I googled and found a chart that says it will only make around $2k on year 15 on guaranteed return, anything before will be a loss. If she surrenders now, she'll probably will lose $6k. Please advise.

Discussion (14)

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Loh Tat Tian

22 Aug 2019

Founder at PolicyWoke (We Buy Insurance Policies)

This is an alternative to CPF SA if you are looking at accumulating. I have done similar IRR calculations and it grow at 4% p.a if you hold it long enough for 30 years.
First and foremost, you could look at it as a bond component (moving forward) instead of surrendering, because you are potentially losing 50% of your premiums paid.

Can investing through DCA gives you higher returns for a better Alpha or Beta? Can you accept the risk? Are you satisfied that you truly wish to surrender?

Do let me know if you wish to surrender as I can offer a higher surrender value than the insurance company. Most other Reps Holdings and all may not wish to buyback your policy because its not capital gauranteed (needs to reach 10th year).

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Ming Ann

14 Aug 2019

Financial Consultant at Prudential

The first step would to be find out why did she bought it in the first place (i.e the objective). Then ask will this plan help in terms of your financial goal ? Pruwealth generally are giving more benefits in the later stage of life because of the compounded interest from the bonuses. One factor to consider is that also the age she is currently. For example, if she is at her 20-30s that range, you will notice that PW gives considerable returns at older age more towards retirement.

Investing in stock of course will generate more returns generally, but of course the risk is also a factor to take note about. SSB is very hard to compare in terms of apple to apple because SSB only last for 10 years max while PW doesn't work that way.

My suggestion is that, if you are not surrendering this plan mainly due to budget constraints, can do both ways, whichever works better after a period of observation then you can switch accordingly. I think that PW is a good tool when you factor in your retirement planning because you get to choose your own maturity date

Ultimately, if the product suits your financial goals, then it might be worthwhile to continue.

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Your other half knows how pruwealth works? Does she knows how to calculate the returns from the Bene...

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