Income Luxe Plus Solitaire II plan is a single premium, whole-life insurance policy with several key features and benefits worth noting. Other than providing financial security risk solutions, insurance companies also help mitigate the risk of outliving your capital in the form of regular payout annuity plans. This is one such plan.

Income Luxe Plus Solitaire II has features to be elaborated:

• Lifetime Monthly Cash Payouts: Starting from the end of the 3rd policy year, the plan provides monthly cash payouts until the original insured reaches the age of 120. These payouts can add up to 3.75% of the net single premium annually, with 1.308% guaranteed and 2.442% non-guaranteed. The non-guaranteed portion depends on the performance of the Life Participating Fund.
• Flexibility in Managing Wealth: Policyholders have the option to either receive the monthly cash payouts or accumulate them with Income to earn interest at a rate of up to 3.00% per annum. The prevailing interest rate is not guaranteed.
• Change of Insured Option: After the 2nd policy year, there is the flexibility to change the policy’s insured. This can be useful for legacy planning or for businesses to retain key employees. The new insured must be under 75 years old at the time of the change.
• Secondary Insured Option: Policyholders can appoint a secondary insured to continue the policy and wealth accumulation if the original insured passes away. The secondary insured must be the policyholder (before 75 years old), spouse (before 75 years old), or child/ward (before 18 years old). This option can be exercised up to three times.
• Protection Against Death and Terminal Illness: The policy provides a lump sum benefit in the event of the insured’s death or diagnosis of terminal illness. The payout is the higher of 105% of the net single premium paid less all monthly cash benefits, or the guaranteed portion of the cash value, plus 100% of the terminal bonus less cash bonuses paid. If the cash value is higher, that will be paid instead.
• Maturity Benefit: At the end of the policy term, which is the anniversary immediately after the original insured’s 120th birthday, a maturity benefit of 105% of the net single premium and a non-guaranteed terminal bonus is paid.
• Guaranteed Acceptance: There is guaranteed acceptance for the plan regardless of health conditions, without the need for medical check-ups. However, financial underwriting is applicable.
• Legacy Planning: The plan is designed to help leave a legacy for loved ones with options for secondary insured and change of insured.
• Flexibility for Business Owners: Business owners can use the policy to incentivize key employees with the change of insured option, and for talent retention.

Things about Income Luxe Plus Solitaire II to note:

• Single Premium Requirement: The policy requires a single premium payment with a minimum of $100,000, which may not be feasible for all individuals. The maximum is $10,000,000.
• Non-Guaranteed Returns: A significant portion of the cash payouts and maturity benefits are non-guaranteed, as they are dependent on the performance of the Life Participating Fund. The interest rate for accumulated cash payouts is also not guaranteed.
• Policy Loan: If at any time the amount of the loans and interest exceeds the cash value of the policy, the policy will end automatically.
• Surrender Value: The policy has a guaranteed surrender value equivalent to 80% of the net single premium. If the policy is canceled prematurely, the cash value received may be zero or less than the premiums paid.
• Exclusions: The death benefit is not payable if the insured commits suicide within one year of the cover start date. The terminal illness benefit is not payable if the claim arises from deliberate acts or the effects of alcohol or drugs.
• Policy Termination: The policy will terminate upon surrender, when a loan exceeds the surrender value, claim on death or terminal illness, or at the end of the policy term.
• Complexity: The plan has various conditions and options (e.g., secondary insured, change of insured) that require careful consideration.
• No Riders: No additional riders can be added to this policy.
• Limited Payment Options: Premiums must be paid with cash.
• Not Eligible for CPF or SRS: Income Luxe Plus Solitaire II cannot be purchased using funds from the Central Provident Fund (CPF) or Supplementary Retirement Scheme (SRS).

Income Luxe Plus Solitaire II Use Case Study Example:

Mr. Lee, a 40-year-old successful entrepreneur, is looking for a way to secure his financial legacy for his family and ensure a smooth wealth transition. He desires a plan that provides both financial returns and long-term security.

Mr. Lee’s Goals:

• Generate a reliable income stream for his retirement.
• Leave a substantial legacy for his children and grandchildren.
• Ensure flexibility in managing his assets.
• Protect against unforeseen events like death or terminal illness.

Solution: Luxe Plus Solitaire II

Mr. Lee purchases the Luxe Plus Solitaire II with a single premium of $1 million.

• Initial Setup: At the start, Mr. Lee has the option to appoint a secondary insured. This allows him to plan for the future and ensure the continuity of the policy.
• Monthly Cash Payouts: Starting at age 43, Mr. Lee begins receiving monthly cash payouts of $3,125. This payout is comprised of a guaranteed monthly cash benefit of $1,090 and a non-guaranteed monthly cash bonus of $2,035, based on an assumed long-term average return of 4.25% per annum from the Life Participating Fund. He chooses to accumulate these monthly payouts with Income at a prevailing interest rate of up to 3.00% per annum. If the Life Participating Fund earns a long-term average return of 3.00% per annum, the illustrated monthly cash payout would be $2,130.
• Flexibility and Control: At age 60, Mr. Lee decides to withdraw $250,000 from his accumulated funds to purchase a yacht for leisure, demonstrating the flexibility offered by the policy. He also can withdraw cash benefits accumulated with Income at any time.
• Wealth Transfer: At age 70, Mr. Lee decides to assign the ownership of the policy to his son, Darren, aged 35. Darren then changes the policy’s insured to himself and appoints his newborn daughter, Alice, as the secondary insured. Darren chooses to receive the monthly cash payouts to supplement his living expenses. This demonstrates how the policy can be passed down through generations.
• Continuation of Policy: When Darren passes away at age 80, the policy continues with Alice becoming the insured. The monthly cash payouts continue to be paid. This ensures that the legacy continues even after the original and subsequent insureds are no longer alive.
• Maturity Benefit: When Alice is 50 (and the original insured would have been 120), the policy matures, paying out $3,010,000. Over the policy’s term, the illustrated total payout is $8,337,882. If the long-term average return of the Life Participating Fund is 3.00% per annum, the illustrated maturity benefit would be $2,410,000 and the policy would have provided an illustrated total payout of $3,588,597.

Key Benefits Demonstrated in this Use Case:

• Long-term Income: The policy provides consistent monthly cash payouts.
• Legacy Planning: The secondary insured option allows for wealth transfer across generations, ensuring a lasting legacy.
• Flexibility: The policy allows for changes in the insured and the option to accumulate or withdraw cash benefits.
• Protection: The policy provides a death and terminal illness benefit.
• Maturity Benefit: The policy provides a lump sum payout at the end of the policy term.
• Guaranteed Acceptance: Mr. Lee was able to secure this policy without any medical check-ups.

Potential Downsides/Considerations in this Use Case:

• Non-Guaranteed Returns: The illustrated figures are not guaranteed, and the actual payouts may vary based on the Life Participating Fund’s performance. The monthly cash bonus is non-guaranteed. The interest rate for accumulated cash payouts is also not guaranteed.
• Single Premium: Mr. Lee had to make a substantial single premium payment of $1 million, which might not be feasible for everyone.

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.

Income Luxe Plus Solitaire II 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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