Prudential is the latest insurer to offer a universal life product, PruUniversal Vantage.

This comes just after Great Eastern Life launched their own universal life product, Prestige Legacy some weeks ago. AIA also has their own universal life product, AIA Platinum Legacy.

For those who are not familiar with universal life (UL), this class of product might seem confusing at first.

An universal life product is used to provide for a large (mega) sum assured.

Premiums are usually paid in a single lump sum or spread over a few years.

Technically, the easiest way to understand how a universal life works is to relate it to a single premium investment-linked plan (ILP).

The main difference is that instead of being invested into funds, the UL will provide for a crediting rate (or interest) on the lump sum. So, it is like an ILP invested into interest generating instruments.

Prudential’s PruUniversal Vantage offers a guaranteed minimum of 3% interest.

Of course, we should never compare the interest rate we can obtain from a UL with a simple bank deposit because you need to factor in all the charges within the plan. After netting off the charges, the returns will be less than what you will receive from the guaranteed rates.

Other universal life products sold here include Manulife’s Heritage, HSBC’s Jade Global Select and Transamerica Life’s TransAce and TransUltra series.

Most universal life products are denominated in USD as the assets are usually used to buy USD denominated bonds in order to provide for a decent crediting rate.

Next week, AIA will be launching the S$ 2Pay5 plan, a 5-year non-participating, limited 2-year pay product (Edit: The plan has been launched already).

How it works is that you will need to pay annual premiums for two years, and then receive a lump sum payout at the end of five years.

The plan offers a guaranteed yield ranging from between 2% to 2.2% depending on the annual premium amount.

• 2.00% :  $5,000 - $9,500
• 2.10% : $10,000 - $14,500
• 2.15% : $15,000 - $24,500
• 2.20% : $25,000 onwards

For example, if your annual premium is $10k, your maturity benefit will be

10000 x 1.021 x 1.021 x 1.021 x 1.021 x 1.021 + 10000 x 1.021 x 1.021 x 1.021 x 1.021 = $21961

Suitable Market

Individuals who require a guaranteed return of 2% over 5 years and does not have any immediate cash needs.

Unsuitable Market

Individuals who want short term liquidity.

Risks of the product

• Surrender penalty upon early withdrawal
• Automatic surrender due to non-payment of 2nd annual premium

The death benefit of this plan is the higher of total premiums paid (excluding advance premiums, if any) and the cash surrender value

The plan also provides for an additional 10% accidental death benefit in the first policy year.

If you are interested in this plan, you can contact me here.

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

AIA Complete Critical Cover is a new plan launched recently by AIA to provide insurance coverage against various severities of critical illnesses.

The typical 30 critical illness (CI) cover that most people have provides for a claim of 100% of the insured amount in the event a critical illness occurs. The critical illness must be included in the list of 30 CI under the plan and also fit the definition of the medical condition.

While the definitions are standardized across different insurers, meeting the definition of the medical condition would usually mean that the illness is already at a fairly developed stage.

The AIA Complete Critical Cover helps to bridge this gap by classifying the critical illness into 3 severity levels – early, major and catastrophic paying out 25%, 100% and 200% of the insured amount respectively.

Multiple claims on different critical illnesses are also possible provided the total claimable amount is not more than 200% of the insured amount.

There’s also other terms and conditions to be fulfilled (e.g. Only 1 claim for Early Critical Illness, Major Critical Illness and Catastrophic Critical Illness would be payable from each Critical Illness Group under the Basic Policy) which I will not go into details here.

The minimum age of entry for the plan is 6 months and is renewable up to age 75.

The AIA Complete Critical Care can be said to be a hybrid of Great Eastern’s Early Payout Critical Care and Prudential’s PruMultiple Crisis Cover. Providing such a comprehensive coverage would of course comes at a cost.

Another similar product in the market would be TM Asia’s Cancer Care which is something like Great Eastern’s Early Payout Critical Care but is restricted to providing coverage only for Cancer.

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.