AIA yesterday launched their new A$ Wealth Accumulator product.

AIA A$ Wealth Accumulator is a 4.5-year, non-participating single premium endowment plan. The guaranteed yields are as follows:

Single Premium Amount (A$)

$10,000 – $29,000 : 4.50% p.a.
$30,000 – $74,000 : 4.60% p.a.
$75,000 and above : 4.70% p.a.

As an example, a single premium of A$88k will give a guaranteed amount of A$108,204.80 on maturity.

Take note that this product is based in Australian dollars (A$) and the maturity amount will also be paid in A$. Thus, it might not be suitable for those who are averse to foreign currency exchange rate risk or who are unable to understand the implications of currency risk.

On the other hand, if you already plan to hold on to A$ long term or intend to use A$ for future needs (eg education funding or retirement), then the currency risk would be less of an issue.

This product is available for a limited period only.

As a comparison, current foreign currency fixed deposit rates for A$ is about 3-4% (depending on amount) for a 12-month duration.

So the AIA (A$) Wealth Accumulator gives a slightly higher yield but a longer lock in period. If there is an early surrender of the plan, then there will also be a slight loss in capital.

Surrender value based on A$1000 invested
End of Policy Year, Cash Value (A$)

1, 888.30
2, 982.80
3, 1,084.10
4, 1,162.70
4.5 ,1,219.10

NTUC Income has increased their tranche of Capital Plus (CPN16) and will be extending the offer of this plan till 21st December 2009 (next monday).

They will provide guaranteed acceptance for any application that reaches their office by 21st December, 5.00pm.

Looks like demand for these kinds of product seems to be tapering down.

NTUC Income just launched their latest tranche of Capital Plus yesterday.

Capital Plus CPN16 is a single premium non-participating plan which offers a guaranteed return of 1.6% p.a. for a 2 year term, available for new and exisiting policyholders. This means an initial investment of $10,000 will have a maturity value of $10323.

The minimum investment is $10000 and can only be bought using cash and funds from SRS.

Application will be closed once they have reached $25m or 14 Dec 2009, whichever is earlier. Application is on a first-come-first-serve basis.

For comparison, the current fixed deposit rates are as follows (figures provided by NTUC):

The table doesn’t include CIMB which currently offers 1.2% for a 12-month fixed deposit and 1.4% for a 24-month fixed deposit.

In the past few months, we have seen a number of single premium non-participating insurance plans being launched by different life insurance companies: AIA, NTUC, Prudential, HSBC and TM Asia Life.

The plans are either 2 or 5 year terms offering yields of between 1.4% to 2.75% p.a.

• AIA Wealth Accumulator
• HSBC Guaranteed Saver Plus
• PruInvestor Guaranteed Plus
• TM NestEgg (SP Guaranteed)
• NTUC Capital Plus

The recent trend sees the yield getting lower compared to the series that were launched earlier in the year. For example, HSBC’s current Guaranteed Saver Plus gives a yield of 1.8% to 2.0% p.a. for  a 5-year term, compared to an earlier 2.25% to 2.75%.

However, the take-up rate for these plans remains tremendous. With the plans being of “limited size”, consumers have been quick to take up the plans. The latest offering by TM Asia Life took less than a week to be fully subscribed.

Looks like this is the hot product in our market now. The liquidity fueling these products  is likely to be funds being transferred from banks.

TM Asia Life is the latest insurer to launch a 5-year non-participating single premium insurance product, called TM Nest Egg (SP-Guaranteed 4).

The plan requires a minimum of $15,000 and gives a fixed yearly dividend (interest) of 2.45%. The investment can be using either cash or SRS.

No medical underwriting is required and the maximum age to be eligible for the product is 70 years old.

There will be a slight insurance protection of 5% of the premiums for death and total and permanent disability (TPD). Meaning if someone dies during the term of the plan, his dependents will receive 105% of the premiums paid.

The plan is only suitable for those who don’t require the funds for 5 years as there will be surrender penalties for early termination of the plan. The money received in the event of an early surrender will not be the same as the money put in.

TM Nest Egg (SP-Guaranteed 4) will be withdrawn once the subscription target has been met.

Judging from the speed which Prudential took to sell out their PruInvestor Guaranteed Plus in just a few weeks, this latest launch by TM Asia Life will probably not be on the market for long.