Poor return from Living policy

Dear Mr. Tan,

I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?

REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.

In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.

There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.

This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.

http://www.tankinlian.com/faq/savings.html