Someone sent me the Benefit Illustration of a new policy called the Cash Cow and asked for my views. This policy requires premium to be paid for 10 years and the policy can continue without any further premium payment.
I compare the surrender value under the Cash Cow policy at the end of 10 years and 20 years with the same amount invested in the STI ETF, assuming the same yield of 3.75% and 5.25%, and obtained the following amounts:
The payout from the STI ETF is at least 50% higher than the cash cow, assuming the same interest rate earned.
The life insurance cover provided by the Cash Cow is very low, so the cost is probably less than 1% of the premium that is being saved. The Cash Cow gives a poor return, compared to an investment in the STI ETF.
I compare the surrender value under the Cash Cow policy at the end of 10 years and 20 years with the same amount invested in the STI ETF, assuming the same yield of 3.75% and 5.25%, and obtained the following amounts:
The life insurance cover provided by the Cash Cow is very low, so the cost is probably less than 1% of the premium that is being saved. The Cash Cow gives a poor return, compared to an investment in the STI ETF.
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