Oct 22, 2017

Cory Diary : Life Insurance - Part One

This article is to share my experience on an insurance policy i have for 20 years which I plan to surrender at appropriate time. Do note this maybe specific with my insurance company and time frame which may vary widely in expectation with others.

Insurance : Whole Life Plan wTPD and have reach 20 years where I am entitled Bonus (Guaranteed and Non-Guaranteed). I heard about cases where the non-guaranteed portion did not happen to expectation. So wonder do the unfortunate happen to me too. :P

Insured amount : $70K (~)
Cash back received : $25K (~)
Monthly Payment: $200 (~ )
Last check with support call : Net Surrendered Value about $50K (~)

When I check for surrender procedures here's what I got.

"We are sorry to hear of your intention to surrender your policy.

May we say that it is not to your advantage to surrender a policy because:
(1) Your insurance protection comes to an immediate end.
(2) Your surrender value could be less than the basic premiums paid, especially in the early years of the policy.
(3) You pay a higher premium for a new policy in the future.
(4) The premium for a new policy may not be as attractive as before. Or, you may not even be offered a policy at all.

You may wish to consider other alternatives. You could:
(1) Convert the policy to a Paid-Up Assurance or Extended Term Assurance without having to pay further premiums.
(2) Reduce the Sum Assured and pay a smaller premium.
(3) Continue the policy under Automatic Premium Loan (APL)* provision, until it is convenient for you to repay the loan.
(4) Take a Policy Loan * if you need cash quickly.

* (Interest on APL and Policy Loan is currently at 6.0% per annum on the daily balance.)

Should you still decide to surrender your policy, please complete and submit the attached forms to us for processing. Please note that faxed or scanned copies of the forms are not acceptable."

If I compute all my returns and premium paid to date for every transactions, and if my surrendered value indeed realized per their confirmation, XIRR roughly 4%. If so is like a form of saving with Insurance element in it. 

Currently the surrender process is a hassle as I am based oversea. So it may take a while before I initiate my request formally.




  1. Hope you didn't cash out the cashbacks as leaving them in the policy will substantially improve yield.

    Par products like wholelife or endowment can act as savings product but need holding power coz reasonable-to-good yields can only be obtained with 20+ years holding period. Those who over-commit will lose out if job / income / cashflow instability & terminate within first few years.

    Also par products are lousy insurance as you need to pay a very expensive premium to get adequate coverage.

    1. Not yet cash out as said in my article. Agree the insurance portion is kind of useless especially now. I did a check on the projected returns in my contract. The key variable after 20 years that can make the difference to continue staying in the policy is the non-guaranteed portion.