Singlife Elite Term II
December 10, 2024
FWD Invest First Summit
January 2, 2025
The Singlife Legacy Indexed Universal Life plan offers a combination of life insurance coverage and investment opportunities. Review some of the features as well as a use case to determine if there is a fit into your financial plans.
Elaboration of some of the features of Singlife Legacy Indexed Universal Life::
- Life Insurance Coverage: The plan provides lifelong protection against death and terminal illness.
- Potential for Higher Returns: The plan offers a Fixed Account with a minimum guaranteed crediting rate of 2% p.a. and a Lock-in Guaranteed Crediting Rate in the first year. The Index Account, tied to the performance of the S&P 500 and Nasdaq-100 indices, provides the potential for higher returns.
- Market Downturn Protection: The Index Account has a guaranteed floor rate of 0% p.a., which means that investments will not suffer negative returns even in a market downturn.
- Loyalty Bonus: Starting from the 11th policy year up to age 100, a Loyalty Bonus Crediting Rate of 0.35% p.a. is added to both the Fixed and Index Accounts.
- Flexibility: The plan offers flexible premium payments, allowing policyholders to skip or discontinue payments as long as the policy has sufficient value. It also allows for flexibility in premium allocation between the Fixed and Index Accounts. Policyholders can also reallocate or rebalance values between the Fixed and Index Accounts.
- No Lapse Guarantee: The policy has a No Lapse Guarantee for the first five years, provided certain conditions are met. This ensures the policy does not lapse even if the account value falls to zero.
- Penalty-Free Withdrawals: Starting from the 6th policy year, policyholders can make penalty-free withdrawals of up to 5% of the account value once per policy year.
- Change of Life Assured: The policy allows the option to switch the Life Assured, offering flexibility for business or personal financial planning.
- Accessibility: The plan has a relatively low minimum coverage starting at US$250,000.
Take note of the following about Singlife Legacy Indexed Universal Life:
- Not a Capital Guaranteed Product: The plan is not a capital-guaranteed product, and is therefore not suitable for those seeking such a product.
- Not Guaranteed Returns: The plan does not offer guaranteed returns. The crediting rate for the Index Account is based on the performance of underlying indices, which can fluctuate.
- Complexity: The plan involves multiple accounts, crediting rates, and charges, which may be complex for some policyholders to understand. The crediting rate for the Index Sub-account is subject to a cap rate that may change, which could limit potential gains.
- Fees and Charges: The policy involves various fees and charges, such as premium charges, policy expense charges, fund charges, and cost of insurance, which can reduce the policy’s value.
- Surrender Charges: Surrender charges apply if the policy is fully surrendered, partially withdrawn, or if the sum assured is reduced in the first 10 policy years, which can be costly.
- Minimum Surrender Value: The minimum surrender value is only applicable at the time of full surrender and does not increase the amount available for withdrawals and loans.
- Policy Default: The policy can go into default status if the account value is insufficient to cover monthly charges.
- Withdrawal Limitations: Withdrawals are subject to minimum amounts and conditions. Penalty-free partial withdrawals are capped at 5% of the account value.
- USD Denomination: The plan is denominated in USD, which may not be suitable for customers who do not want to invest in US dollars.
- No Automatic Premium Loan (APL): The policy does not offer an Automatic Premium Loan (APL) option.
- No Reduced Paid-Up Insurance (RPU) or Extended Term Insurance (ETI): The policy does not offer Reduced Paid-Up Insurance or Extended Term Insurance options.
- Underwriting: The plan is offered on a full underwriting basis, meaning that not all applicants may be eligible.
Singlife Legacy Indexed Universal Life (IUL) can help with estate equalization by ensuring that assets are distributed equitably among beneficiaries, even when those assets are not easily divisible. Here’s how:
● Addressing Unequal Asset Distribution: Without a plan like Singlife Legacy IUL, it may be difficult to distribute assets evenly, especially when some assets, like a business, are intended for specific heirs. For example, a person might have a business they want to pass to one child and cash intended for other children. Singlife Legacy IUL can provide a solution to ensure all children receive an equal share of the estate.
● Equal Distribution through Life Insurance: By purchasing a Singlife Legacy IUL policy, an individual can ensure an equal distribution of wealth among their children. The policy provides a death benefit payout that can be used to balance out the distribution of assets.
● Example Scenario: Consider Richard, who has a food business worth US$5 million that he wants to leave to his eldest son, and US$3 million in cash for his other two children. Without Singlife Legacy IUL, the assets are not distributed equally. With a Singlife Legacy IUL policy, Richard can pay a single premium of US$1.36 million for a coverage of US$10 million. Upon his death, his eldest son receives the food business, and his other two children each receive US$5 million from the policy, thus achieving an equal distribution of assets. In this scenario, Richard’s total asset value, including the coverage from Singlife Legacy IUL, is US$16.64 million, with US$1.64 million in cash available for his retirement.
● Flexibility: The plan offers flexibility in premium payments and allocation between Fixed and Index accounts. This allows individuals to tailor the plan to their specific financial goals.
● Switching Life Assured: The option to switch the life assured allows for maintaining financial stability in business or personal life.
In summary, Singlife Legacy IUL can serve as a strategic tool for estate equalization, ensuring that all beneficiaries receive an equitable share of the estate, irrespective of the nature of the assets involved.
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.
Singlife Legacy Indexed Universal Life 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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