We all have a savings goal. I'm saving for financial freedom and retirement. What about you?
I'd be sharing my analysis on this universal life plan called ELASTIQ (You know like elastic aka flexible... get it?).
I'd touch on why I think it's a good product that is simple to use.
This plan not an ILP (investment-linked plan) but a universal life plan (UL)
This question was posed on the Seedly platform.
It is NOT an investment linked plan but a universal life plan (UL).
As you see from my reply above, there is no investment risk that you bear. Capital guaranteed.
What is Universal Life plan based on Etiqa Singapore's definition?
Universal life plan is a whole life insurance that offers flexibility in the amount and timing of premium payments. This plan pays a death benefit and allow build-up of cash value through offering interest crediting rate. Our universal life plan offers a guaranteed minimum interest crediting rate.
What is Universal Life plan based on my understanding?
There are many USD universal life plans out there for the high net worth. But they are different to this which is more of a retail product. Universal life plans has two key features.
Firstly, it is a permanent policy as in it is till your age of 100 before maturity.
Secondly, it is based on a transparent interest crediting (for this plan 2.02%p.a guaranteed).
This method is unlike a traditional Participating (PAR) whole life plan where the insurer declares bonuses only at year end.
Why the difference between universal life plan and a PAR plan?
A universal life plan buys fully into bonds (possibly entirely). For Elastiq it's possibly entirely into safe singapore dollar dominated bonds. On the other hand, a Participating (PAR) whole life or Participating (PAR) endowment plan invests like 20-40% into equities. It's returns fluctuate because of it. Hence, the Participating (PAR) fund has a non-guaranteed component.
Click here if you want to see a policy document.
How does this compare to endowment plans in the market and Singapore Savings Bond (SSB)?
One of the closest plans to compare it against is the 3y Singlife endowment plan.
Singlife has a 3y endowment plan that gives you 2.2%p.a for a 3y term guaranteed.
The key difference is that the Elastiq plan allows you to freely top up and withdraw (subjected to keeping $5k there to avoid charges based on their T&C). While the Singlife 2.2% endowment plan has some partial surrender and free withdrawal option, it is meant to be kept till maturity.
If you choose less flexibility with Singlife, you get 0.18%p.a more.
How does it compare against the Singapore Savings Bond SSB?
The key difference is that the Elastiq plan guarantees rates for first 3 years only.
The SSB has rates guaranteed for 10years. This is the current SSB rates for the FEB2019 issue.
In exchange, you get a little bit more (0.04%p.a) with Elastiq plan.
There is every possibility that the interest crediting after 3years is higher than 2.02% because they follow a "prevailing market rate" method.
I interpret it as, if the overall interest rate goes up, they could increase the crediting rates from year 3 onwards.
For the Etiqa plan, interest is credited every month for the Elastiq plan. As to when it is credited, I haven't found details of it. Neither has my first interest been received yet.
*Note: you will get a prorated coupon with the SSB if you sell it off before the coupon period. This was highlighted by one of the readers.
Also, the Elastiq plan allows you to freely top up and withdraw (subjected to keeping $5k there to avoid charges based on their T&C). SSB requires you to pay the $2 at every buy/sell.
Using Elastiq as a savings wallet
This plan is risk free. Guaranteed by SDIC.
I guess the greatest benefit of this Elastiq plan is if you use it as a FLEXIBLE SAVINGS WALLET.
Kind-of like the OCBC 360 or the UOB One account (You can read the D&S article here on UOB One).
For the Elastiq plan, can make a recurring or ad-hoc Top-up to your policy and the surrender value is at least the principle from Day1. You can also make partial withdrawals after 90days at a minimum of $500.
How I'm using it
I'm tapping on the referral program that is till 31jan19.
I'd be splitting $5k for my account and $5k referring my wife's account.
With the second account, we should qualify for the referrer and referred component. You can use this idea if you don't mind having yet another account and don't mind more marketing messages coming in.
Take note that the 0.5% Etiqa eWallet credits issued under this Program CANNOT be converted to cash. Perhaps just use it for travel plan purchase with Etiqa?
Credits come in after about 8weeks only. Click here to read the T&C of the promotion.
To get the first leg of the 0.5% of policy premium promotion, you can input referrer code R99534 if you are looking for one. I didn't have one to input on the first leg.
There will be $50 takashimaya vouchers that I'd qualify as "referrer".
I was thinking maybe I'd use it to sponsor some campaigns for TheAstuteParent in future.
PS: In the coming year, I expect more insurers to launch a similar product to this by Etiqa Singapore.
It is a key reason why I wanted to try using this product.
This plan was mentioned in my outrageous forecast for 2019! Check video out =)
Disclaimer: The above information is fully of my personal view
Disclosure: I do not distribute Etiqa Singapore's products professionally. I'm currently a user of the plan.
If you have an alternative view, leave them in the comments section below!
Last updated on January 10th, 2019 at 04:02 pm