Effect of deduction

Hi Mr Tan,
I started to read your blog recently and realised that I might be ripped off. Please see attached policy I brought 3 years ago. Am I right to say the effects of deduction is 51%? What your advice? Terminate after I can break even say after 4-5 years?

RW
REPLY
The effect of deduction at the end of 30 years is 35% compuated as follows:

• Total cash value (including non guaranteed): $53935     65%
• Effect of deduction                                      $29132     35%
• Accumulated premium                                 $83067   100%

Your policy will reach the breakeven point after 14 years (i.e. find the year where the cash value exceeds the total premium), and not 4-5 years.

To decide whether to continue or cancel the policy is a difficult question. Read my FAQ on "existing insurance policy" in my blog. Or read my book, Practical Guide on Financial Planning, available at www.easysearch.sg/ishop