Dear Mr Tan,
I brought a 25 years anticipated endowment plan from P in Year 2003. This plan with monthly premium of S$137.67 allows annual cashback of S$1,000 (from 2nd year onwards).
The guaranteed surrender value start from S$1,000 on the 2nd year and increased up to S$1,413 on the 15th year, and then decreased to S$1,000 on the 25th matured year.
The Non-guaranteed surrender value start from S$110 on the 3rd year and increased up to S$24,811 on the 25th matured year (based on 2.78% projected investment yield to maturity).
I have done a quick calculation as follows:
Annual Premium = $1,652.04
Total Premium paid for 25 years = S$41,301
Total Cashback received (from 2nd years onwards) = S$24,000
Guaranteed maturity benefit = S$1,000 (5% of sum assured)
Total guaranteed benefit with total cashback received = S$25,000
Total Non-guaranteed maturity benefit: S$24,811 (based on 2.78% projected investment yield to maturity)
After 25 years, if the 2.78% projected investment yield to maturity is met, I will only received a total of S$8,510 after deducted the total premium paid, or even lower if the actual investment yield decreases.
After coming to 5 years of enforcing this plan, I have realised that I may have make a wrong choice to buy this policy as the returns seems rather low. I would like to seek your advice on the followings:
1) Do you think I should continue with this plan till 25 years?
2) What plans are there with better guaranteed returns?
I find it difficult to analyse this complicated product. The maturity benefit is uncertain, as a large part is not guaranteed. I also do not know what is the loss that you have to face, if you decide to terminate the policy now.
If you decide to terminate the policy, you can buy a decreasing term insurance policy for the insurance protection and invest the difference in a low cost investment fund. Read this FAQ:
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