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Manulife InvestReady Growth is an Investment Linked Plan (ILP) <Are ILPs bad? Read more here> that is designed for individuals who aim to achieve long-term wealth accumulation goals through regular investments. The plan invests 100% of the regular premium payments into a selection of investment funds. The policyholder can choose from a range of funds, with the option to switch funds, redirect premiums, and make partial withdrawals.
Elaboration of some Manulife InvestReady Growth features::
- Flexibility: Policyholders can adjust their regular basic premiums or make extra payments (top-ups) at any time. The policy also offers a “Flexi Start Date,” which allows policyholders to change their regular premiums or even miss payments without incurring charges, as long as missed premiums are paid back before the Flexi Start Date.
- Wealth Accumulation with Bonuses: Manulife InvestReady Growth features several bonuses aimed at boosting investment growth:
- Welcome Bonus: Granted in the first policy year as additional bonus units based on the premium band and chosen Minimum Investment Period.
- Annual Premium Bonus: Given if the first premium is paid annually. It is a one-time bonus paid at policy inception.
- Premium Bonus: Awarded for continued premium payments after the initial investment period, starting from the Flexi Start Date. This bonus is a percentage of the prevailing regular basic premium, capped at the first-year annualized regular basic premium.
- Booster Bonus: This is a one-time bonus paid at the end of the Minimum Investment Period (MIP). It is activated if the account value (including past withdrawals and costs) is equal to or lower than the total basic premiums paid, and no regular premiums were missed before the Flexi Start Date.
- Loyalty Bonus: An annual bonus paid after the end of the MIP, starting from either policy year 16 (for a 15-year MIP) or policy year 21 (for a 20-year MIP). This bonus is conditional on the policy remaining in force and no withdrawals being made in the 12 months prior to the bonus declaration date.
- Minimum Investment Period (MIP): This is a pre-selected period during which charges apply for full or partial surrenders or missed premiums. Policyholders can choose a 15-year or 20-year MIP.
- Partial Withdrawals: Starting from policy year 6, policyholders can make partial withdrawals up to 20% of the account value (minus any previous partial withdrawals and charges).
- A lower withdrawal charge of 8% applies to these withdrawals.
- Withdrawals related to specific life events, such as reaching age 21 or 65, enrolling in tertiary education, marriage, childbirth or adoption, and purchasing a residential property, are exempt from withdrawal charges.
- Policyholders can apply for two life event withdrawals throughout the policy term.
- Withdrawals exceeding the 20% limit are subject to standard partial withdrawal charges.
- Full Surrender: Policyholders can fully surrender the policy at any time. Surrender charges apply if the surrender occurs during the MIP.
- Protection: The policy provides coverage against death and terminal illness. The death benefit is the higher of 101% of total premiums paid or the account value.
Take note of the various charges and fees associated with Manulife InvestReady Growth, including:
- Cost of Insurance: This is deducted monthly and is based on your age, sex, and smoking status.
- Administrative Charge: Deducted monthly and varies depending on the policy year.
- Partial Withdrawal Charge: Applies if you make a partial withdrawal during the MIP.
- Surrender Charge: Applies if you fully surrender the policy during the MIP.
- Premium Shortfall Charge: Applies if you miss regular premium payments before the Flexi Start Date.
- Management Charges: These vary depending on the chosen funds and are detailed in the fund prospectuses.
Manulife InvestReady Growth use case study::
- Profile: Roy is a 35-year-old individual with a newborn daughter. He seeks to grow his wealth to support his family and build savings for retirement.
- Plan Choice: He purchases a Manulife InvestReady Growth – 15 Years Flexi 10 plan. This plan features a 15-year Minimum Investment Period (MIP) and a Flexi Start Date at policy year 11.
- Premium: Roy opts for an annual basic premium payment of S$12,000.
- Policy Start: At the start of the policy, he receives:
- Welcome Bonus: S$5,400. This bonus is calculated based on the higher premium band (S$9,600 to S$9,999,999) and a 15-year MIP, resulting in a 45% Welcome Bonus rate.
- Annual Premium Bonus: S$360. This bonus equals 3% of his first-year annual premium.
- Partial Withdrawal (Not Stated When): Roy decides to purchase a new property. To fund the down payment, he utilizes the partial withdrawal flexibility of his plan. He withdraws 20% of his existing account value.
- Waiver of Charges: As this withdrawal is linked to a life stage event (purchasing a property), he is exempt from the usual 8% partial withdrawal charge.
- Continued Premium Payments: Roy chooses to continue paying his regular premiums after policy year 10.
- Premium Bonus: As he continues premium payments beyond the MIP, he receives a Premium Bonus of 2% of his regular premium. This bonus is paid on each premium payment, as long as the accumulated partial withdrawals after the MIP are less than his first-year annual premium.
- Policy Year 15 (Age 49) – End of MIP:
- Booster Bonus: If Roy’s account value at the end of the MIP is equal to or less than his total premium payments, he will receive a one-time Booster Bonus. This bonus is 35% of his initial annual premium, and it is paid only if no premiums were missed before the Flexi Start Date.
- Policy Year 16 Onwards (Age 50) – Flexi Start Date:
- Loyalty Bonus: Roy begins receiving an annual Loyalty Bonus of 0.3% of his account value. He is eligible for this bonus as long as his policy is in force and he has not made any withdrawals in the 12 months preceding the bonus declaration date.
- Premium Payment Options: Roy continues to pay his annual premium (even though he may choose to stop), and the illustrations show projected account values at ages 45 ($163,319), 50 ($276,750), and 60 ($514,599), assuming an 8% annual investment return.
- Partial Withdrawal Flexibility: Regardless of whether he continues paying premiums, Roy has the flexibility to withdraw from his policy at any time without incurring partial withdrawal charges. This flexibility starts from the Flexi Start Date and is separate from the partial withdrawal flexibility and life stage event withdrawals available earlier in the policy.
- Policy Maturity: The policy technically matures at age 99, and the net account value is paid out to Roy.
Some things to note. This review post will get dated. And the product might not be available for new subscriptions at some point. Hopefully this serves as reference for future policyholders who have forgotten what they have taken up.
There can be shifts in planning narratives over time. For example, limited premium tenures gain popularity over the years because people are less confident of their future earning capacity or sustainability of income levels. Regular payout features gained popularity when more and more people are in tune with the FIRE (Financial independence retire early) movement. An extended period of low interest rates brought down insurance products’ returns yield for policy holders, but now in a higher interest rates environment, things have changed.
Manulife InvestReady Growth may or may not fit into your financial plans. Understand that there is no best plan for all time, but there is a method to objectively facilitate your decisions. Read more about it here.
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