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Leave a Lasting Legacy
How to Address Retirement & Legacy in One Plan
leveraging on power of compounding
Here are two case studies that demonstrate how Income Gro Retire Flex Pro and AIA Platinum Gift for Life II achieve Retirement & Legacy planning.
Case Study 1:
2 Generations Collectively Enjoy the Maximum Benefits of a Retirement Income Plan
The Income Gro Retire Flex Pro plan is specifically designed to provide a regular income stream during retirement.
While the primary focus of this plan is on retirement income, it also provides legacy planning through
a. Death Benefit to the beneficiaries
or
b. Continuity of retirement income by appointing the spouse (below age 65) or children (below age 18) as secondary life insured.
In the event of original life insured passing, the secondary insured will become the insured of the policy and the policy continues until the death of the insured or end of the policy term, whichever happens first.
With proper arrangement, the family continues to receive the retirement income payments.
By appointing a secondary life insured, you create a safety net that ensures your retirement income plan continues to benefit your family upon your passing.
Retirement & Legacy Planning with Income Gro Retire Flex Pro
Mr Tan, a 50-year-old, aimed to secure sufficient retirement income while leaving some financial legacy for his 15-year-old daughter, Elly.
He purchases the Income Gro Retire Flex Pro plan, choosing a single premium term and paying a lump sum of $150,324.
Mr Tan chooses to retire at age 65 and to receive a regular monthly payout until age 100.
Mr Tan as both the Policy Owner and Life Assured, appoints Elly as Secondary Life Assured.
In the event of his passing before age 100, Elly will become the insured of the policy. The policy continues until the death of the insured or the end of the policy term, whichever happens first.
With proper arrangements, his family continues to receive the retirement income payments.
Mr Tan finds peace of mind knowing that he and his family will collectively enjoy the maximum benefits of his retirement income plan regardless of any future uncertainties.
Figures (S$) quoted in the example are based on the illustrated investment rate of returns of 4.25% p.a.
This means that if Income Life Participating Fund achieves an average of 4.25%p.a. return, the total monthly payout of the policy (including both guaranteed and non-guaranteed bonuses) would align with the figures mentioned above.
Based on an illustrated investment rate of returns of 3.00% p.a., the total monthly payouts that Mr Tan receives over 23 years would be S$250,547, the total monthly payouts that Elly receives over 12 years would be S$130,720. Total payouts received by 2 generations would be $381,267.
Guaranteed monthly payout is $550, total guaranteed payout would be $231,000 over 35 years.
The two rates shown do not represent upper and lower limits on the investment performance. The actual benefits payable will vary according to the future experience of the Participating Fund.
For Income Life Participating Fund, the past investment rates of return (after deducting investment expenses only) are shown in the table below.
Changes in the economic and investment environment may affect the investment performance of the Life Participating Fund and the bonuses that you may receive.
As investment performance may vary from year to year, bonuses are smoothed to ensure stable medium to long-term returns on your participating policy.
This means that bonuses may be held back in good years to support the maintenance of the bonus in years when the performance of the Life Participating Fund is less favourable.
It is intended that over the long-term, the net impact of smoothing is neutral. Smoothing will never reduce any guaranteed benefits that may apply. Smoothing is a common industry practice.
Case Study 2:
Leverage on Power of Compounding to Reap Financial Benefit Spanning 3 Generations
The AIA Platinum Gift for Life II plan also offers retirement planning benefits by providing a regular income stream.
However, the plan places a stronger emphasis on legacy planning.
By structuring the policy as a 3rd party policy and appointing the 2nd generation as the life assured, you extend the policy term and prolong the monthly payout period, ultimately benefiting the 3rd generation as well.
This strategic approach ensures a continuous flow of benefits across generations, maximizing the long-term financial security for your family.
Retirement & Legacy Planning with AIA Platinum Gift for Life II
Mr Lee, a 50-year-old, wants to plan for a fruitful retirement while ensuring a financial head start for his 20-year-old son, Javier and his future kids.
As part of his plan, he decides to take up the AIA Platinum Gift for Life II policy and names Javier as the insured.
Mr Lee pays a single premium of S$163,250. After 5 years, Mr Lee begins receiving a monthly payout. He uses it to supplement his retirement lifestyle.
30 years later, when Javier is 55 years old, Mr Lee transfers ownership of the policy to him.
Javier then names his child as the beneficiary, allowing him to continue the legacy that his father started.
Javier continues to receive a monthly payout until he passes on at age 89. Upon Javier’s passing, his beneficiary receives a lump sum Death Benefit payout.
Knowing that he has provided for his son and grandchild’s financial future gives Mr Lee a sense of fulfilment and pride.
Figures (S$) quoted in the example are based on the illustrated investment rate of returns of 4.25% p.a.
This means that if AIA Life Participating Fund achieves an average of 4.25%p.a. return, the total monthly payout of the policy (including both guaranteed and non-guaranteed bonuses) would align with the figures mentioned above.
Based on an illustrated investment rate of returns of 3.00% p.a., the total monthly payouts that Mr Lee receives over 30 years would be S$97,875, the total monthly payouts that Javier receives over 33 years would be S$121,275. And, if Javier were to pass away at age 89, his death benefit would be S$371,058# . Total payouts received by all 3 generations would be $590,208.
Guaranteed monthly payout is $125-$181.25, Guaranteed Death Benefit at age 89 is $167,058, total guaranteed payout would be $133,650 + $167,058 = $300,708 over 63 years.
The two rates shown do not represent upper and lower limits on the investment performance. The actual benefits payable will vary according to the future experience of the Participating Fund.
# The death values illustrated above include all the monthly income payable for that year.
The historical investment rates of return (after deducting investment expenses) of the Participating Fund are shown below. The Participating Fund can be separated into a few sub-groups; the figures below refer to the investment returns for the sub-group or class of products that this policy belongs to.
Please note that historical performance may not be indicative of future performance.
Changes in the economic and investment environment may affect the investment performance of the Participating Fund and the bonuses or dividends that you may receive.
In order to provide an element of stability in the returns to policyholders, smoothing is applied by spreading profits and losses from one year to the next.
This means that in years where experience is good, not all the profits will be distributed to policyholders through dividends declared, but instead such profits may be used to maintain returns to policyholders in years where experience is poor.
The Benefits of a Retirement Income Plan with a Legacy Component
Retirement & Legacy Planning
Stress-free Cashflow During Retirement
Creating a Meaningful Legacy
Emotional Satisfaction and Family Values
Flexibility and Customization
Peace of Mind and Financial Protection
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This page Is published for general information only and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person.
The information contained in this webpage, including any data, projections and underlying assumptions are based upon certain assumptions, and analysis of information available as at the date of the webpage.
Please refer to Important Info / disclaimer here.
Date: 20th May 2023