Invest round-up: A look at new financial products

Prudential Singapore launches an endowment plan which provides a lump-sum payout after 10 years when it matures.
Prudential Singapore launches an endowment plan which provides a lump-sum payout after 10 years when it matures. PHOTO: PRUDENTIAL

The Sunday Times outlines three new insurance offerings and a personal loan

PRUDENTIAL SINGAPORE: PRUSAVE MAX10

This is an endowment plan which provides a lump-sum payout after 10 years when it matures.

Prudential says the plan's objective is to help policyholders be more disciplined in saving for milestone life events, such as a wedding, down payment for a home or a dream holiday.

Policyholders are able to pay their premiums in five years, after which a feature known as the Automatic Premium Benefit will fund the remaining five years' premiums.

The plan offers coverage in the event of death, and policyholders may enhance the coverage with supplementary benefits to waive premiums when critical illnesses or the unforeseen happens. No medical underwriting is required.

Ms Catherine Lum, financial planning specialist at DIYInsurance, noted that the principal is not fully protected as the guaranteed maturity amount is less than premiums paid, unlike many endowment plans.

Said Ms Lum: "This undermines the purpose of an endowment savings plan which is designed for low risk-takers with a conservative profile."

She added that the illustrated maturity yields are "not attractive", as the projected yields are based on the higher projected investment return of 4.75 per cent a year.

"There are other instruments in the market that can easily achieve similar returns with lesser risk. For instance, the principal-guaranteed Singapore Savings Bonds come with no withdrawal penalty and they may generate about 2 per cent to 3 per cent average annual returns over 10 years."

On the other hand, you will get nothing back if you surrender PRUsave max10 plan before 12 months. This is because it offers a surrender value only after the policy has been in force for 12 months, and 12 months' premiums have been paid.

AVIVA SINGAPORE: MYWHOLELIFEPLAN

Aviva's MyWholeLifePlan is a limited premium whole-life participating plan that covers death and terminal illness.

It offers an enhanced cover with an option of three times or four times higher protection which applies to the basic cover. For instance, you can enjoy higher coverage of three times ($300,000) or four times ($400,000) the chosen sum assured (assuming the sum assured is $100,000) up to age 70.

As this is a participating plan, the cash value and bonuses will accumulate over time. The premium term options are 10, 15 and 25 years.

There is a "guaranteed extra protection" option which allows you to purchase a new term cover (no cash value) without health underwriting when you reach certain life stages such as graduation, marriage and when you become a parent.

And if you are unable to pay premiums owing to retrenchment or unemployment, you can ask Aviva to put your premiums on hold and waive the incurred interest, subject to terms and conditions.

Other optional supplementary benefits include total and permanent disability (TPD) advance cover, critical illness (CI) advance cover, and early CI advance cover which kicks in when you are diagnosed with early stages of the covered 35 illnesses. The plan can be assigned or transferred from parent to child.

Mr Patrick Lim, associate director at financial advisory PromiseLand Independent, likes the flexible income payout option which means you can opt to partially cash in your policy and receive monthly payouts up to age 99.

He also highlighted that in this plan, TPD can be defined as not being able to carry out two or three activities of daily living for at least six months, or irrecoverable loss of limb or sight, or inability to work for at least six months due to permanent disability.

This is significant, given that most people find the payouts from ElderShield inadequate.

PRUDENTIAL SINGAPORE: PRUPERSONAL ACCIDENT

This personal accident plan offers 24-hour worldwide coverage and up to three times payout for accidents occurring under certain circumstances. It covers accidents, food poisoning, animal and insect bites, including dengue fever and Zika virus.

Policyholders will receive three times the payout amount for public transport accidents, and double the payout amount for private transport and pedestrian accidents, building fires and accidents during school-time.

The plan also offers coverage for injuries sustained during national service and certain adventurous activities like scuba diving.

In addition, it reimburses treatment bills including those from traditional Chinese medicine dispensaries.

Coverage increases by up to 25 per cent in the first five years if no claims are made during the period.

Policyholders can enhance their coverage to receive additional recovery assistance, such as family support funds, payouts for fractures and medical evacuation.

You can choose from six plans with different payouts and premiums based on the required coverage. No medical underwriting is required.

OCBC BANK AND SINGSAVER.COM.SG: PERSONAL LOAN

Available only on SingSaver.com.sg until the end of this month, the OCBC SingSaver.com.sg's 3.53 per cent a year nominal rate is the lowest for a personal loan in the market. The effective interest rate is 8.33 per cent a year. It is applicable only for approved loan amounts for tenures of three years.

The loan aims to help consumers reduce their debt burden and manage their personal finances better.

A version of this article appeared in the print edition of The Sunday Times on May 22, 2016, with the headline 'Invest round-up: A look at new financial products'. Print Edition | Subscribe