Monday, April 7, 2008

NTUC Income Growth Plan

There are many people in my blog criticizing the Growth Plan from NTUC Income. I had also rejected some of the comments because the language used to scold NTUC Income advisers was unacceptable and uncalled for.

What exactly is this Growth Plan about? I like to first proclaim that my blog have nothing to do with NTUC Income, hence you can be assured that my view is independent and unbias.

Growth Policy is a Single Premium Endowment plan
Shortest Term - 5 yrs
Minimum Premium - $5,000
* Maturity Cash value consist of Guaranteed and Non-guaranteed portion
* Sum Assured covers Death and PTD and is doubled in event of accidental death.
* As a special privilege, surrender value = single premium after policy in-force over 12 months. This special privilege is not guaranteed and subjected to Life Insurance Fund actual experience.

Example
Single Premium - $10,000 x 10 yrs
Sum Assured - $12,238.60
Guaranteed Returns - $12,239
Non Guaranteed Returns - $2,624
Total Projected Returns - $14,863
Yield - 4.04% p.a basis 5.25% projected IRR

Real Yield for a 10,000 x 10yrs Growth Plan that matured in 2007 - 4.92%

So what are the criticism?
1) Returns are non-guaranteed and if policyholder use the money for investment, the returns will be higher.
2) There are advisers recommending Growth Plan for Special Account
3) There are advisers recommending Growth Plan for the initial $20k of Ordinary Account

How I feel about it on above 3 critics?
1) I agree that returns are not guaranteed and investment returns are generally better. But there are truly people out there who die die don't want to invest.
*They want a better returns compared to bank deposits. They don't mind locking up this fund for next 5 or 10 years.
* The Ordinary account in excess of $20k is also okay in this plan for same group of people who simply cannot be convinced into investment.
* I don't see anything wrong for such group of people who are satisfied and happy with it.

2) My commentors claim that there are many advisers recommending Growth Plan for client's Special Account.
* I agree that this is not recommended because Risk free returns for Special Account is around 4% and Growth Plan returns are only semi-guaranteed less than 0.1% higher.
* I don't know how these commentors claim they saw many NTUC Income advisers doing this? I have no idea where they see it.
* From my understanding, advisers will have a hard time justifying their recommendation for approval under strict MAS guidelines.

3) There are some advisers recommending Growth Plan for the initial $20k of Ordinary Account. This option is somehow like at the tip of the fence. Either side looks equally okay.
* However, I will not recommend this option because the guaranteed returns is 3.5%. Projected returns of Growth Plan is barely 0.5% higher.
* This 0.5% higher returns is not guaranteed and is in exchange for the opportunity cost of using this fund for other purposes such as mortgage repayment liquidity or Children Education, etc.

Above is my view. If anyone wish to comment, pls comment constructively and no vulgarities please.

7 comments:

Anonymous said...

The 4.92% return was a kept secret of MrTKL. What about the next 10 years?
Not only Iwas disgusted with the ntuc screwed up agent who told my relative that the 4% was guaranteed.
Adrain, is it right? What i am trying to tell you ntuc agents are well trained liars and very greedy . The growth paid 2 % commission ,right?
if only i can use dirty words on ntuc agents here.

Khiat Han Hwee Adrian said...

You are bias against NTUC Income by saying this. Your comment is unfair and not true by grouping all agents as liars and greedy.

NTUC Income do not give 2% commission for Growth Plan. They are not so generous.

Blackbox said...

I do not think anonymous 12:54pm is biased without a reason. This is his personal experience.

We all do not have statistics, but based on the many peoples' experience, it seems NTUC Income agents are generally incompetent.

This is one of its reasons why the young and ambitious join company A or P these days.

Khiat Han Hwee Adrian said...

Not declaring my company doesn't means I am from NTUC Income. Not sure why everyone is bad-mouthing NTUC Income here.

The younger ones joined other companies for various reasons. Definitely not because NTUC Income advisers are incompentent.

I had blocked a few cnonymous comments that associate NTUC Income advisers with all sort of dirty names.

I suspect these comments came from the same person.

Anonymous said...

Adrain, you are from NTUc, otherwise you won't be so ardent to defend ntuc.
it is true ntuc agents compared to other compnaies' agents, they are incompetent.The agent are genrally old people, old uncles and aunties and a few young who don't qualify for other jobs or dropped out, retrenched secretaries or clerks. They maybe good at selling or lying, these two not much different. I have talked to few of them at roadshows. you woulldn't let them be your financial advisers. They should be door to door salesmen or women selling detergent ot icecream or at pasar malam.
Let's face ntuc got themselves into the mrt or ttot by bullshittin and underhand means.

leothu said...

Open you eyes bigger and you will realise unethical agents are everywhere, not only Income.

Khiat Han Hwee Adrian said...

I repeat one last time. The comments are indeed bias against NTUC Income. If anyone spoke bad about any company or the industry, I will still stand out to defend them, not only NTUC Income.

We are not qualified to say advisers from which company are competent or not.

I hope all those anonymous commenters will stand out and tell us who you are. I will not accept comments from people who try to bad-mouth the industry and any company from behind without revealing their identity.