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 Hong Leong Assuarance Cash Promise, worth to invest?

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JohnL77
post Nov 25 2013, 03:48 PM

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QUOTE(lrm8888 @ Nov 24 2013, 05:54 PM)
hahahaha...like i said you still don't get what i meant. Since my 1st post, i said it is my personal calculation from my understanding after discussion with the agent. i also put there (at the last para) "i'm no expert, just a simple calculation. i may be wrong"

i have called the agent (as per ExpZero advised) to ask the agent to provide me the actual calculation and i told him that i want the calculation to be form part of the contract (if i agreed to proceed).

anyway thanks for the advice.

by the way, did you by any chance approach by any HLA agent on this? if not how do you know my point 2 is totally not true? kindly care to explain? maybe you know something that the rest of us do not know? but i do hope that unless you read the contract before on this latest product, no point making assumption based on the old products. i think everyone here knows that old products will take more than 10 years to generate better return than bank FD interest.

also, i only know the advantage of the new product...i have no idea what's the disadvantage of it and i don't think my agent going to explain even if i ask?
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You need to get a projection from the agent and look at the actual cash value. "Guaranteed" vs "Non-guaranteed". Normally you won't breakeven at the 6th or 7th year if that's how long they give you to pay your premiums. They pay their agent's commissions, administrative fee, etc, first.

Don't listen to the agent, look at the projections and calculate the annualized return. http://www.investopedia.com/terms/a/annual-return.asp. And remember, projections are only projections.


Ex-HLA agent.

This post has been edited by JohnL77: Nov 25 2013, 06:58 PM
JohnL77
post Nov 25 2013, 06:57 PM

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Pffff that HLA AGENT didn't reply after boldly claiming 7%?
JohnL77
post Nov 25 2013, 07:45 PM

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QUOTE(wongmunkeong @ May 11 2013, 10:33 PM)
Forced savings?

bwhahaha.. pardon me, brought back a flood of memories from bullkaka-ing insurance agents from yester-years.
my "forced savings" for 12years+ came up to be less than 5%pa CAGR... and that was DURING KLSE's GOLD BULL RUN (80s) with FD rates hitting a high of 12%-13% for 1 year's tenure.  doh.gif
seriously.. "forced savings" should be forced in FD until one finds better things to do with the $, unless one is as stupid as me during when i was 19.

BTW, those days no Internet, nor forums, nor plentiful of personal financial planning books/magazines, thus  people nowadays should be smarter UNLESS they CHOOSE to be lazy & stupid right? sweat.gif
Just a thought  notworthy.gif
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They call it forced savings because they pay their agents, other staff, themselves first, hahaha. Have you seen the kind of paid for vacations their top agents get to go to? All while you enjoy bad service from them. There is one insurance company that doesn't have email. Just want to change payment method also have to fax them.

Without discipline, even if it is "forced savings", I bet you they will still surrender the policy and make a loss. Imagine in a downturn and the projections for your policy get worse, and you really need the money, so you cash in... Wow.....

"BTW, those days no Internet, nor forums, nor plentiful of personal financial planning books/magazines, thus people nowadays should be smarter UNLESS they CHOOSE to be lazy & stupid right?"

That is the problem with Authority. People who don't know anything, will look up to these so called "financial planners". So many of them without CFP (Certified Financial Planner) calling themselves financial planners. So many high school graduates don't know anything about finance wanna plan their own finances using your money.

This post has been edited by JohnL77: Nov 25 2013, 07:50 PM
JohnL77
post Nov 26 2013, 04:53 PM

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QUOTE(lrm8888 @ Nov 26 2013, 01:52 PM)
Hi, thanks for the advice. i finally got the calculation sheet from the agent. well, it is not as flowery as the agent claims, after looking at the the surrender section and i did some comparison how much i can earn from FD vs the surrender value (year on year basis)...after 15 years, if based on best case secnario, Cash Promise is RM2k better than FD but for the worst case scenario FD is RM8k better than Cash Promise  blink.gif

well, it seems like this is worst than HLA Cash Builder???

anyway, i have decided to let it go, if i can't get a better saving rate on the 15 years than no point going for it.
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Agree with cherroy, if possible please share the projection sheet. I might have some lying around, but that is for very old Wealth Builder.

If you practice asset allocation, this kind of plan is not good for rebalancing, because when time to buy cheap assets, your money is tied up.

This post has been edited by JohnL77: Nov 26 2013, 04:55 PM
JohnL77
post Nov 27 2013, 10:54 PM

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QUOTE(lrm8888 @ Nov 27 2013, 10:34 AM)
user posted image
user posted image

ok, here it is...not sure if i'm doing it properly, hope you guys can see the image...lol...

anyway, if for 15 years, FD is at says 3% per annum then at RM60k i'll get RM93,478 (interest + principle). comparing to the sheet that the HLA agnet provided to me, 15 years total surrender value (see (6)) is only at RM95k or RM76k
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smile.gif

I thought this should be pinned somewhere, but they have a disclaimer saying not to be circulated. Wonder if they'll take legal action?

Best part is your surrender value before you pay off the premiums. This is why the way they sell is completely wrong. You are signing a contract to pay 60k of premiums. "Savings plan" konon.

The death benefit is only 7.6 times the money you pay. And it shrinks every year until at the end, they are only giving you back your own money with some small pittance if you die.

This post has been edited by JohnL77: Nov 28 2013, 01:13 AM
JohnL77
post Nov 27 2013, 11:18 PM

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QUOTE(cherroy @ Nov 27 2013, 11:18 AM)
Ty for the sharing.

So after 7 years the surrender value based on better/worst scenario projection (which included cash dividend which is non-guaranteed) is

60,272 or 55,591.

So the statement below is not true.
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cherroy, yklooi and I suggest that Xuzen's following calculation be pinned somewhere so that in the future people who want to ask about insurance endowment can refer:

OK lets do some maths:

You need to put in RM 295.00/mth for 6 years.

Thereafter you get back RM 700.00/year + 5.5% on the dividend = RM 738.50/p.a for the next 30 years.

Part 1 of the calculation (The accumulation phase)
Mode = Begin, since your payment is paid at the beginning of the period
PMT = -(RM 295.00)
Period, N = 12mths x 6years = 72 periods
Present Value ,PVi = 0 meaning you start accumulation from zero
Interest rate, since you are not getting anything during this accumulation period, you are losing money because inflation is working against you. Therefore, I = (Growth - Inflation)/(1+inflation). I am using the conventional 5% inflation for calculation purpose. Therefore effective I = (0-5)/1.05 = -4.7619% p.a. or divided by twelve = 0.3968% per month.

Using these values I presented above I key in the figures into a financial calculator, your get a Future Value (FVi) = RM 18,433.48

Part 2 of the calculation (The distribution phase)
I will use Begin Mode as well, since I assume you will get your annuity due (payment) at the beginning of the period.
PMT = RM 700.00 + 5.5% = RM 738.50/p.a
Period, N = 30 years
Let the Present Value (PVii) equal to the above calculated FVi i.e. = RM 18,433.48
Let Future Value (FVii) = 0, since after 30 years you will get nothing back.
Now keying these new sets of figure into the financial calculator to calculate the Internal Rate Return or Return on Investment (ROI) for the whole 36 years tenure. (from start of the program until the end of distribution phase)

And....

...

...

IRR or ROI(I) = 1.32% p.a.(annualised)

Taa Daa.....

Are you happy with this ROI?

Even FD is consistently hovering above 2%

Xuzen

This post has been edited by JohnL77: Nov 28 2013, 01:41 AM
JohnL77
post Nov 28 2013, 12:38 PM

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QUOTE(lrm8888 @ Nov 28 2013, 10:22 AM)
errrr...i think there must be a clear cut between "saving plans" and "investment plans", i'm no expert, so the formula seems complicated to me...lol...but it is fair to use this formula on HLA Cash Promise? since they did says is only a "saving plans" NOT "investment plans"...the only comparison that i can think off (for saving plans) is comparing with Bank (which is the last part of the calculation ROI os 1.32% vs FD 2%)...just a thought
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Aih.. he simplify the steps, I think need to be familiar with financial calculator (I'm not) to fully understand. I am a bit confused on the Future Value, I thought it was Present Value. I'll try asking him to explain it to me.

There is no "savings plan". These are all insurance endowment policies. These agents don't want to call it endowment because when people hear "insurance" they run away. My experience from being in an ex-HLA agent.

This post has been edited by JohnL77: Nov 28 2013, 08:06 PM
JohnL77
post Nov 28 2013, 07:55 PM

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QUOTE(rinoa_mack @ Nov 28 2013, 07:51 PM)
Hmm or we can call it saving cum insurance plan? Because it comes with TPD and Death protection...What i've learned is if the policy holder dies, they will refund the money that you've paid plus the death protection amount. Still quite big amount ler...
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Please see the projection posted by lrm8888. 1st year they'll payout about 7.6 times the premium you paid. But it gets smaller with each year. This is why, people who buy this plan still buy normal life insurance. doh.gif

"This is a 25 year participating endowment plan..." - http://www.hla.com.my/ourproducts/pds/CashPromise.pdf

This post has been edited by JohnL77: Nov 28 2013, 09:18 PM
JohnL77
post Nov 28 2013, 11:14 PM

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QUOTE(rinoa_mack @ Nov 28 2013, 10:55 PM)
Yup. If you surrender the plan on 4th year, they will refund you less than 30k, it's like they take back the interest paid to you on previous 3 years because you did not fulfill the 6 years terms.
If died on 7th year, they will refund your 60K plus the 76k death benefit. 60K + 76K. This is what I heard...
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I urge you to get a projection from your agent. As you can see from the projection posted by lrm8888, the Total Death Benefit is everything that you will get if you pass away. No 60k + 76k. 76k only.

(7)=(4B)+(10)+(11)+(13)

Get a projection and look at it yourself. If your agent tell you the wrong thing, you should complain to Bank Negara.
JohnL77
post Nov 29 2013, 04:15 PM

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QUOTE(lrm8888 @ Nov 29 2013, 03:43 PM)
I agree with JohnL77 and cherroy comments. look at the sheet that i posted, you should know how much they are paying you when you are dead. btw, why on earth you are looking at the death benefits, might as well just get a normal life insurance plan...like what JohnL77 and cherroy said, the endowment plan for normal life insurace is cheaper. Put the rest of your cash in bank for better saving rate (assuming you have no other investment/saving plans).
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rclxms.gif One less person cheated by unscrupulous insurance agents.

I think she trust her agent too much.
JohnL77
post Nov 29 2013, 08:20 PM

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QUOTE(rinoa_mack @ Nov 29 2013, 06:47 PM)
Hmm...maybe i heard wrongly, need to check with the leader. I keep hearing this is higher rate than FD, higher rate than FD nia...
I'm actually HLA agent, newly joined for few days nia. Just wanna make sure this plan is not cheating people if not, i'll just focus on selling life insurance and MLTA... cry.gif
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All the best rinoa.
JohnL77
post Nov 29 2013, 09:20 PM

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Yup, just accidentally withheld crucial information.
JohnL77
post Dec 4 2013, 07:22 PM

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QUOTE(lunchtime @ Dec 4 2013, 02:07 PM)
HLA don't cheat people, all policies sold must be approved by BNM 1st.

HOWEVER, it is HOW agent sell by misinforming or purposely twist the facts or leaving out certain important information, or doing creative selling that confuses the general population.

Logically, how can an insurance company pay higher interest rates than a bank? And the interest rate is paid based on which sum? The premium paid or the sum assured?

The answers to these questions will reveal the truth.
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Yes, I forgot already, but is the dividend guaranteed?

Can you really call it interest?

The way I see it, you pay a premium and you get a guaranteed income for life. I thought last time the plan was until you 99 years old? Now 25 years plan only?




JohnL77
post Dec 4 2013, 09:36 PM

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QUOTE(lunchtime @ Dec 4 2013, 09:00 PM)
It isn't known as interest in the industry but for layman sake, let call it interest.

Such policies are neither here or there policies.  Not good enough to retire, not good enough to die, not good enough to be disabled yet premium is sky high.

However it appeals to those taken by sweet talking agents who haven't a clue what they are selling. Most agents are blind sheep mislead by greedy shepherd.

Whatever happened to honest agents promoting pure life protection policies? 

Well, selling such mundane life policies results in no flashy big car, no MDRT, no frequent trips, no recognition / awards. What's there to motivate to sell such policies?  Besides, prospect hear life insurance sure run faster than a speeding train.

Selling savings policies sounds better to the prospect (prospect are always greedy for easy money, interest better than FD). Besides the case size can be bigger. So easy money equals to big flashy car, frequent trips, more awards and recognition and so forth.

Who want to buat kerja bodoh? 

In the end, consumers are the biggest losers in this game of greed. Second to lose are the sheep agents who cannot promote to a shepherd himself and cannot tahan anymore with the situation, ala looking for new sales every year.

Not all agency are like what I described but a vast majority are. So many friends who joined the insurance and so far only 2 survived to today. The rest all hangus.
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+1 rclxms.gif

"It isn't known as interest" That's all I wanted to hear. smile.gif

I disagree that all the customers are greedy. Some are just people who severely lack financial knowledge and listen to these hacks for advice. Could be young people who just starting a career or old people who just want to leave some money for their descendants.
JohnL77
post Dec 5 2013, 01:50 PM

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QUOTE(lunchtime @ Dec 5 2013, 09:20 AM)
Selling insurance has no differenation edge, usually Agent X wins over Agent Z in price/cost, as service is generally the same among Agents.

To create an edge, Agents do creative selling, eg, a friend calls himself a 'Life Engineer"  and this is when the problems of misleading, misinterpretation, misinformation, lack of disclosure starts compounded with lack of training, poor training and understanding.

Really, can Agents sit in class for 1 day, answer 60 MCQ questions and next thing licensed to do a client's insurance? What more to do savings?

I have met some insurance agents who tried to sell me savings plan, they totally have no idea what is inflation and they don't know how the underlying components of the plan, simply it is stocks and bonds.

Clients who bought on the promise / expectation of a sweet talking agent have all lose when those promise / expectation don't play out. Agents and insurance company don't lose much.

Mass majority of people of blind, following the masses, lemming-like.
eg, a new born baby, quickly buy education policy because friends, parents and every Tom, d***, Harry do so.

But really what is an education policy? It is nothing more than a normal life / investment linked policy stopped at age 25 and tagged 'education'.

Most education policy cannot even fund 1 years college fees, but people buy into the 'promise' only to find out the CON when they need the money.

They would have been be off savings their money in a dividend based fund or stock.

And these Agents don't advise in these manner, probably due to their lack of knowledge or if they know, due to their personal interest.
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They call themselves "Life engineers" now? Wow so creative. So now they are life gurus too?

I think risk = reward and people who go to insurance companies for investment are mostly people who don't want to take risk so in the end they get what they deserve which is no reward or very little. But I pity people who don't understand the risks that they are taking. Seriously, what is Bank Negara doing to catch all these people misusing the term "Financial Planner"?

And who said got no differentiation? Some agents prettier than others. rclxms.gif

This post has been edited by JohnL77: Dec 5 2013, 08:13 PM
JohnL77
post Dec 5 2013, 08:11 PM

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QUOTE(AcerDynamo2 @ Dec 5 2013, 07:34 PM)
Guys, get one thing clear, Cash Promise or any other savings plans on the market with an insurance company is exactly what it is; a savings plan. If you are expected a 20 to 30 percent margin or if you were told that kind of lucrative interest rates, then please go back to the saying 'if it sounds too good to be true, it probably is.". Some more even a typical investment cannot give that kind of projection! The jizz of a savings plan is to have your money locked down. Or take Warren Buffett's advice, he endorses 'long term'.

I personally sell savings plans and the only way to benefit from it, what I tell my clients is that the only way for them to benefit the most out of this plan is to wait for maturity, 20-30 years. Yes, 20 to 30 years. And that this is your last resort, you don't touch this savings plans whatsoever.

PS. for Cash Promise, or any other plans our there, you will not, or more properly, can not get back your investment if you were to surrender the plan after 6 years.
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"This is a 25 year participating endowment plan..." - http://www.hla.com.my/ourproducts/pds/CashPromise.pdf

How can you call it savings when the money you pay is considered as premiums, not capital. Worst case scenario, Scenario B, you only get your accumulated Guaranteed Income. That's it. It is an endowment, you pay premium, you get Guaranteed Income. So easy to understand.

This post has been edited by JohnL77: Dec 5 2013, 09:48 PM
JohnL77
post Jan 11 2014, 02:56 AM

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QUOTE(kenshen @ Jan 11 2014, 12:26 AM)
Just got my first job a few months back and was looking for something that can provide better returns than FD but without high risk involved. Friend introduced me to this HLA agent who promoted the HLA Cash Promise plan.

RM10,000 X 6 years.

Being a newbie in this, was really attracted by the way he "presented" the plan, with 20% per annum and cash dividends + death/TPD insurance all bundled into one. Just pay for the first 6 years, and continue to enjoy the yearly income and dividends up to 25 years. Can withdraw anytime but early termination would cause me not to fully enjoy the benefits/dividends.

Like some people here, I was fooled into thinking I would have RM60,000 at the end of 6 years + RM12,000 + Cash dividends 0.02%

Some more its by a bank not some shady skim-cepat-kaya. So convincing.

But then came home, thought about it a bit. Did some calculation with all the limited knowledge I have and some research. Deduced that it is actually not that far from FD actually.

Drew up a table with the same concept of RM10,000 x 6 years for FD and HLA Cash Promise (A&B)

user posted image

It seems that only in Year 13, the amount withdrawable in Sce (A) is more than the FD, where as in Sce (B), forever will be less than FD. Assuming the FD rate stays at 3.0% for 25 years. That is probably not likely though.

In conclusion I think HLA Cash Promise is NOT a scam. Its just a long term savings plan that does not differ much from the FD overall but comes with insurance protection.

user posted image

This is just my personal deduction, so there might be a lot of things I've overlooked.
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You missed the fact that you can get insurance protection for much cheaper. For example, you get PA protection of RM200,000, you pay RM200 premiums per year. Go look at the surrender value vs the premiums that you pay for these plans.

You also forget the liquidity risk. If you practice portfolio theory, you won't have liquidity to buy assets when they are cheap.

And when someone sell you one thing but you get another thing, it is a scam. For example, someone sell you magic science water that can improve your health but turns out it is just water and there's no scientific evidence to prove your health improved. Sure, you still get the water, but don't you feel scammed?

Hehehe...

This post has been edited by JohnL77: Jan 11 2014, 02:56 AM
JohnL77
post Jan 11 2014, 07:08 PM

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QUOTE(Bonescythe @ Jan 11 2014, 11:36 AM)
Actually, Cash promise plan/saving plans is not a scam product la. It sounds scam when the agent is misleading. The product is approved by BNM and even the SI need to go thru BNM for approval to be presented to the public.

But when agent talk, they can promise sky and earth and some promise heaven for you, and that is the place where things goes wrong.

On liquidity, you can cash out partially on what you had paid. Just need to go to HLA and enquire about it, so no issue on it. If you did not cash out on your annual cash out, you can cash them out in the future if you need them in a sudden.
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Yes.......................................................................................................

HLA plan = not a scam

How agents sell to you = scam



That's what I said. Reading comprehension.................................. doh.gif doh.gif doh.gif

This post has been edited by JohnL77: Jan 11 2014, 07:09 PM
JohnL77
post Jan 12 2014, 03:58 PM

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QUOTE(andrewleewaikeong @ Jan 12 2014, 03:20 PM)
I like the word

"Savings with insurances. GREAT if you die or Tpd"

macam encouraging us to die only....lol
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Not great actually. If you invest your money somewhere else and have a separate insurance policy, when you die you will get moar money. Seriously, from my experience, a lot of people who buy these endowment policies have a separate life insurance policy. So the death benefit for these endowment policies are nothing to shout about. If you get a projection from the agent, you will see that the death benefit becomes peanuts as the years go by.
JohnL77
post Jan 23 2014, 10:56 PM

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QUOTE(wan7075 @ Jan 19 2014, 12:17 PM)
personally i was fooled by my HLA agent too. I noticed it on 3th year but no choice i have to paid until 6th year. and this coming feb is the last payment...

i will withdraw my money once complete 6th year..
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What MNet said is true. If you withdraw now, you will lose money. Just accept you got cheated la, tell your friends and family not to get cheated.

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