Poor return from competitor's policy

A consumer asked for my view about this "cash" policy taken with another insurance company:

- monthly premium $225
- term of policy: 21 years
- annual payout (from 2nd anniversary) $1,500
- sum assured $30,000

On subsequent enquiry, it seems that this is a participating plan, and the projected maturity benefit (not guaranteed), is $38,000.

Based on the projected benefit and annual payment, this plan offers a return of only 1.3% per annum for 21 years, which is rather low.

I advised the consumer to check with his insurance adviser on the guaranteed return, and on the likelihood of getting better than guaranteed.

The consumer is now considering to buy a term insurance from NTUC Income and to invest the remainder of the monthly premium in our Combined Fund. It should give a much better return.