Last Updated on 16, May 2014
Today I decided to do some calculation on NTUC Income Vivolife. Why? Because I’ve been hearing that the NTUC Income Vivolife is a very lousy whole life that gives poor value for money. But Vivolife is a whole life policy that is never meant for savings and yet people continue to calculate its yield like as if it is a saving plan. Anyway, I decided to calculate the yield if it is treated like a saving plan (when in reality it is NOT).
Parameters: Last age 0, female, limited premium 15 years of $1427 annual premium for sum assured $120,000 with $150,000 as the minimum death benefit for the first 15 years.
Iteration #1:
Assumptions:
Gross Yield 3.75%
Surrender at end of 25 years.
According to the BI, FV at the end of 25 years is 35,645. Therefore, IRR = 2.83%. Therefore, expense ratio = 3.75-2.83=0.92%.
Iteration #2:
Assumptions:
Gross Yield 5.25%
Surrender at end of 25 years.
According to the BI, FV at the end of 25 years is 41,846. Therefore, IRR = 3.72%. Therefore, expense ratio = 5.25-3.72=1.53%.
Iteration #3:
Assumptions:
Gross Yield 3.75%
Surrender at end of 65 years.
According to the BI, FV at the end of 65 years is 143,008. Therefore, IRR = 3.31%. Therefore, expense ratio = 0.44%%.
Iteration #4:
Assumptions:
Gross Yield 5.25%
Surrender at end of 65 years.
According to the BI, FV at the end of 65 years is 244,249. Therefore, IRR = 4.26%. Therefore, expense ratio = 0.99%.
I consider the expense ratio to be acceptability low as the expense ratio is inclusive of the mortality and morbidity charges. Conclusion: Based on the above iteration I consider the expense ratio to be good enough and hence NTUC Income Vivolife is a good product. If in doubt, always consult your financial adviser.
Like this article? Subscribe to my newsletter below for more.
What do you think? Leave a comment.