Tokio Marine Affluence@Future

Elaboration of Feature Benefits of Tokio Marine Affluence@Future:

Investment Flexibility: The plan allows policyholders to choose their preferred policy currency (SGD, AUD, GBP, USD, or EUR) and premium payment term (15 to 30 years). It also enables investment into a variety of curated funds and provides options for managing dividend distribution.

Premium Allocation: 100% of regular premiums are used to invest in the chosen funds. Regular premiums are allocated to the Initial Unit Account (IUA) for the first 24 months, and then to the Accumulation Unit Account (AUA).
Bonuses: The plan includes an initial bonus within the first two policy years, with rates varying based on premium band and payment term. Additionally, loyalty bonuses are paid annually starting from the third policy year. The initial bonus can be as high as 320% of the regular premium within the first two years, including a special first-year welcome bonus.
Death Benefit: Policyholders can choose between a basic or advanced death benefit. The advanced death benefit, applicable until the end of the premium payment term, pays the higher of 101% of the total policy value or 100% of the total regular premiums paid, plus the top-up units account value. The basic death benefit pays 101% of the initial and accumulation units account value, plus 100% of the top-up units account value.
Life Replacement Option: The policy offers a “life replacement option,” allowing the policyholder to change the life assured, subject to certain age and premium payment term conditions.
Additional Features: The plan also offers options for top-up premiums, recurring single premiums, and partial withdrawals, providing flexibility to adjust the investment as needed. There is also a fund switching option that allows for capitalizing on market opportunities.
No Medical Underwriting: The plan does not require medical underwriting, but financial underwriting may be necessary.

Tokio Marine Affluence@Future has pointers to take note of:

No Guaranteed Returns: The plan does not offer guaranteed returns. The value of the units may fluctuate, and the performance of the sub-funds is not guaranteed.
Charges and Fees: The plan includes several charges, such as initial charges, policy charges, premium charges for top-ups and recurring single premiums, and surrender charges. Monthly protection charges also apply if the advanced death benefit is selected. These charges may affect the overall returns on the investment.
Surrender Charges: If the policy is surrendered before the end of the premium payment term, a surrender charge will be applied. The surrender charge is 100% for the first two policy years.
Policy Termination: The policy can automatically terminate if regular premiums are not paid within the grace period during the first 24 months. In this case, the policyholder may receive the Top-up Units Account value, but the policy will be terminated.
Complexity: The plan involves multiple accounts (Initial Unit Account, Accumulation Unit Account, Top-up Units Account), various charges, and bonuses, which may make it complex to manage and understand.
Withdrawal Restrictions: Partial withdrawals are only allowed from the Accumulation Units Account during the premium payment term. Withdrawals are also not allowed during the first 24 months.
Minimum Premiums: Minimum amounts are required for regular premiums, top-ups, and recurring single premiums. For example, the minimum top-up premium is $1,000.
Premium Holiday: While a premium holiday is allowed after the first 24 months, relevant fees and charges remain payable.
Riders: Riders are only available in SGD. For non-SGD policy currencies, only the Waiver of Premium Rider and Early CI Premium Waiver Rider are allowed.

Use Case Study Example of Tokio Marine Affluence@Future:

A 35-year-old individual, Alex, is seeking a long-term investment plan with some flexibility and life insurance coverage. Alex is not looking for guaranteed returns but is comfortable with market-linked investments, and has a medium to long term financial horizon. Alex has a partner and they are planning for their future family needs, and would like to potentially pass on their wealth to the next generation.

Needs and Goals:

Wealth Accumulation: Alex wants to grow their wealth over the next 20-30 years, with the potential for higher returns than traditional savings accounts.
Flexibility: Alex desires the ability to adjust their investment strategy over time and to access funds if necessary. Alex would like the option to increase their investment over time, as their financial situation allows.
Life Insurance Coverage: Alex wants a life insurance component to protect their partner and future family.
Legacy Planning: Alex is also interested in having the option to transfer their wealth to future generations.
Currency Choice: Alex prefers to invest in USD, as they anticipate moving to the US sometime in the future.

Affluence@Future Solution:

Policy Selection: Alex chooses the Affluence@Future plan with a 25-year premium payment term. Alex selects the USD currency option.
Regular Premiums: Alex commits to an annual regular premium of $24,000, placing them in premium band 3.
Initial Investment: 100% of Alex’s regular premiums are used to purchase units in their chosen investment funds.
Initial Bonus: Alex receives an initial bonus of 143% of their regular premium in the first year and 122% in the second year, credited to the Initial Unit Account (IUA), in the form of additional units, based on the applicable rates for a 25 year premium payment term, and premium band 3. This bonus is allocated according to the latest investment allocation instruction.
Investment Strategy: Alex invests in a mix of curated funds, diversifying their portfolio, with a 1% allocation per fund.
Death Benefit: Alex chooses the Advanced Death Benefit option to protect their family. This provides a higher payout if they die during the premium payment term.
Loyalty Bonus: Starting from the third policy year, Alex will receive a loyalty bonus, which is calculated based on a formula that includes an adjustment factor and loyalty bonus rate and the AUA value. For the first 10 years of the policy, Alex will receive a loyalty bonus of 0.70% in the third policy year, 0.70% in the fourth policy year, and 0.75% from the fifth to tenth policy year. From year 11 to 15, the loyalty bonus is 1.41%, and from year 16 onward, the loyalty bonus is 1.35%.
Flexibility:
- After the first year, Alex makes a one-time top-up premium of $5,000 to take advantage of a market opportunity. A 5% premium charge is applied to this.
- After a few years, Alex takes a partial withdrawal from the AUA to fund a home down payment. There is no charge for the withdrawal, but the bank charges for the transfer are borne by Alex.
- After 5 years, Alex reduces the regular premium to the minimum of $900 per quarter. However, Alex cannot increase the regular premium above the original amount committed.
Life Replacement: After 10 years, Alex and their partner add their child as a life assured. This addition doesn’t require medical underwriting, but the monthly protection charges are adjusted based on the new life assured.
Passive Income: After the premium payment term, Alex opts to receive dividends as cash from the dividend funds in their AUA and TUA, creating a passive income stream.
Policy Continuation: After the premium payment term, the policy continues with an annual loyalty bonus. The basic death benefit is paid out when the last life assured dies.

Fees and Charges:

Initial Charge: During the premium payment term, an initial charge of 0.48% per annum will be applied, deducted monthly from the IUA.
Policy Charge: Starting from the 25th month, a monthly policy charge of 1.2% per annum will be applied.
Monthly Protection Charge (MPC): Since Alex chose the advanced death benefit, a monthly protection charge will be applied, calculated based on the sum at risk. The MPC for the first 24 months will be deducted in a lump sum in the 26th month. The MPC rate is based on age and gender.
Top-up Premium Charge: A 5% charge is applied to each top-up premium.
RSP Premium Charge: A 5% charge is applied to each recurring single premium (RSP).
Other Charges: Alex bears all bank charges associated with transactions.

Potential Outcomes:

Growth: Over time, Alex’s investment could grow significantly due to the potential returns from the chosen funds and the annual loyalty bonuses.
Flexibility: Alex can adjust their investment strategy with fund switches, make withdrawals when necessary, and add more capital via top-ups.
Protection: Alex’s family is protected financially with the death benefit, especially during the premium payment term with the advanced option.
Legacy: The life replacement option allows Alex to transfer the policy and its value to their child, creating a lasting legacy.

Important Considerations:

Market Risks: Alex understands that the investment is subject to market risks, and the returns are not guaranteed.
Charges Impact: Alex knows that various charges will reduce the overall returns, and needs to take that into account when making decisions.
Long-Term Commitment: Alex is aware that it is a long-term commitment, and early termination could result in a surrender charge and potential loss of value.
Premium Holiday: Although a premium holiday is an option, Alex knows that fees and charges will still be applicable.

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.

Tokio Marine Affluence@Future 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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