Invest Round-up: Two insurance products and an investment tool

Prudential is selling a retirement plan, Aviva has an investment-linked offering and Standard Chartered Bank is using big data and analytics to help affluent customers

PRUGOLDEN RETIREMENT
BY PRUDENTIAL SINGAPORE

The PRUGolden Retirement plan provides a stream of monthly income for 10, 15 or 20 years.

According to Prudential, it helps to supplement the monthly cash payouts from the national annuity insurance scheme, Central Provident Fund (CPF) Life.

Assuming a 55-year-old male pays $33,843 annual premiums for five years, his monthly income, which will be paid out from age 65 for 20 years, is projected to be $1,234. Of this, $1,000 is guaranteed.

Pros: The guaranteed monthly income is doubled and future premiums are waived when the life assured suffers a disability as a result of an accident. In the event that the life assured dies, the benefits of the plan can be transferred to the spouse, if the spouse is named as the joint policyholder.

No medical underwriting is required, and there is a choice to pay regular premiums or for a limited period of five years.

Cons: The policy's monthly payout comprises guaranteed and non-guaranteed components. While the latter offers potential additional returns, this portion is subject to the investment landscape. There is a risk of receiving only the guaranteed monthly payout.

It will be prudent to use the guaranteed monthly payout as the benchmark when planning for retirement. Any additional monthly payout from the non-guaranteed portion can be viewed as a bonus.

As this product is designed to fund retirement, it offers limited death benefit coverage. In the event that death occurs before the retirement age kicks in, the plan pays 105 per cent of the total premiums paid or 101 per cent of the surrender value, whichever is higher.

If death occurs after retirement age, the plan pays 105 per cent of total premiums paid less paid guaranteed monthly income or 101 per cent of the surrender value, whichever is higher.

As with most insurance policies, you are at a disadvantage if you terminate your cover in the initial years. If you surrender this plan within two years, you will get nothing back.

MYLIFEINVEST

BY AVIVA SINGAPORE MyLifeInvest is a whole life investment-linked insurance plan (ILP). Aviva says its objective is to meet protection and long-term investment needs in one plan.

Pros: Aviva will contribute an extra 5 per cent of the premium amount to the policy every five years, from the 10th policy year onwards, if no premium holiday has been taken.

It is designed to be adaptable as needs change. For instance, if you need to increase your protection coverage - for example, when you have a child - you can do so at certain milestones without further medical underwriting.

As your dependants grow older and may no longer be financially reliant on you, the plan offers the flexibility to reduce the protection element to zero and raise the investment portion to focus on wealth accumulation. There are riders, such as cover for early critical illnesses, that you can add to the plan at any time to customise coverage.

Policyholders can make unlimited withdrawals from the accumulated cash value of the policy when needed. And premium holidays are available if you ever need to stop paying premiums for a while.

Cons: As this is an ILP, the policyholder will be subject to investment risks and there are no guaranteed returns. There is a chance that the cash value is less than the premiums paid if the funds invested into do not perform as expected.

In addition, you might forget to reduce the protection element to zero as you age, which means your protection cost will become higher and may eat into your returns. Bundled products like this plan may be more difficult for some consumers to comprehend. So, they may wish to consider buying protection and invest separately.

DIGITAL PERSONALISED INVESTMENT TOOL BY STANDARD CHARTERED BANK SINGAPORE

StanChart's new digital personalised investment tool helps its priority banking customers - those with assets under management of at least $200,000 - generate investment ideas.

The bank says this is Asia's first digital personalised investment tool for the affluent here. Using the tool on an iPad, relationship managers will leverage on big data and analytics when advising clients. This helps clients to make informed investment decisions in a timely manner.

Ms Judy Hsu, chief executive officer at StanChart, said the tool incorporates each customer's risk profile and relevant investment holdings.

"In the past, the relationship manager would have to consolidate materials, research and market data from various sources before he would be able to develop a proposal that is suitable to the client's needs. But with the new tool, relationship managers can provide quality advice instantly and in a consistent, objective manner."

In recent months, banks have been stepping up efforts to enhance their offerings to customers by using technology and social media.

A version of this article appeared in the print edition of The Sunday Times on November 27, 2016, with the headline 'Invest Round-up: Two insurance products and an investment tool'. Print Edition | Subscribe