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Future Insurance Policy Illustrated Investment Rate Reduced(guestpost)

Future Insurance Policy Illustrated Investment Rate Reduced(guestpost)

Future Insurance Policy Illustrated Investment Rate to be reduced to 4.25% and 3.00% from 4.75% and 3.25%.

This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with a username known as @kyith and has 1,000+ followers.

Last week, we received an announcement that with effect from 1st July 2021, the policy illustrated investment rate (PIRR) will be lowered from 4.7% to 4.25% and 3.25% to 3.00% respectively.

What is Your Policy’s Illustrated Investment Rate (PIRR)?

Some of your insurance policies accumulate cash values. You contribute additional capital, on top of insurance charges to it.

The insurance companies will take your capital and invest in a participating fund. You can see this partipating fund as a pool of stocks, bonds, cash, property investments managed by a group of managers, much like your unit trust, hedge fund with a certain mandate.

 The performance of this participating fund’s return determines how much cash value is accumulated.

Typically, endowment planslimited whole life plans are the kind of policies whose cash value is tied to the performance of the participating fund.

Term plans do not accumulate values so they are not impacted by this illustrated investment rate in any way. Investment-linked policies (ILP) performance is tied to the underlying unitt trust chosen and therefore are not affected by this. Universal life policy returns are typically determined by crediting rate or a hybrid benchmark for those indexed link, so they are less affected by this as well.

The following extracts are taken from a policy’s benefits illustration:

You can see that there are two investment rate of return provided to illustrate to you how much value your policy will accumulate in due time.

One is a optimistic rate (4.75% a year) the other is conservative (3.25% a year)

This is for illustrative purpose. It does not mean that the eventual investment return will fall between 3.25% and 4.75%.

 Here are the actual historical investment return of different insurance companies:

You will notice that year to year, the investment return varies.

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Why the Financial Planning Platform Space Can Have Room For Improvement (Guest Post)

Why the Financial Planning Platform Space Can Have Room For Improvement (Guest Post)

This article, Why the Financial Planning Platform Space Can Have Room For Improvement was originally posted here. He is a veteran community member on InvestingNote, with username known as Kyith.

life-insurance-cover-plans-india

My relationship with insurance started in 1997 when I first enlisted in the army. I think many of you guys would share the same experience as myself.

The army company I was posted to, let in an adviser to persuade us to buy a personal accident plant.

That was my first policy.

I wouldn’t have to think about insurance again, until in 2005, a year after I graduated from university. That was about 2 years in, where I already discovered the world of unit trusts.

I thought maybe I should start being a responsible adult. After learning about unit trust, I learned that it can be rather suicidal if you put a lot of money into something you do not know much about.

I decide to do what I did when I have no idea how to invest in unit trust. I picked up a relevant book, or a few books on personal finance and read it. I have an idea about different kinds of protection.

However, I was still not very sure. Some experienced advisers and experienced members in the unit trust forum was kind enough to share their knowledge. Those proved to be invaluable in drawing what is in the books to real life scenario.

The Challenge of Well Informed DIY Consumers

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