Small quantum is the key reason for my quick-n-easy decision

— Here are the key product features I have collected about HsbcLWA [HsbcLife_Wealth_Abundance], to be confirmed.

1. I pay 5 annual premiums of 12k/Y, over 49 months (M1 M13 M25 M37 M49), and then wait for another 71 months.
2. .. Free and unlimted prem holiday after 5th installment.
3. surrender value is not so good within the initial (49+71) 120 months i.e. MIP i.e. the prison_term. The “early surrender penalty” improves with time, and drops to 0 after 120M
4. my 60k would buy units of a chosen fund (switchable FOC among 60).
5. NAV of the units determine my surrender value at any given time after 10Y
6. death benefit .. based on the higher of NAV and total premium.
7. monthly payout starts in M2, based on current NAV, and continues till age 99 of “life assured”
8. both monthly payout rate and NAV will fluctuate
9. Life assured .. would be my daughter… automatically assign to me.
10. .. after some time, I may buy another policy for my other kid, at the same premium.
11. (sustainable) payout .. is managed by PIMCO; death benefit is guaranteed by insurer. Surrender value is specified in the insurance contract and specified in terms of NAV.
12. transparent expRatio 2.1 ppa during 120M… a real charge to my account, though I may not notice it. Improves to 0.6 ppa after 120M.
13. 8% “startup bonus”

— two components
aa) a fixed-income mutual fund
bb) a simple life insurance with 10Y prison_term, without gurantee of 100% surrender value

The (aa) provides “lifetime” payout + a capital preservation better than cpfLife.
The (bb) provides death/TPD benefit and nothing much

— Overall product rating (most important on top) .. Comparing against CC) cpfLife and AA) my existing annuities and other products

1. quantum: excellent. Comparable to (actually better than) one of my annuities [FLI250]
2. prison_term: bad.. I can’t back out easily if I find the product unsuitable.
3. .. between CC and AA. CC prison_term is “life imprisonment”
4. sustainable payout rate: 6% is recent performance only. CC is the best, despite the declining bequest
5. surrender value safety: no guarantee, unlike my existing annuities
6. .. between CC and AA
7. payout wait: perfec, better than CC and AA
8. death benefit: acceptable. Better than CC

— prison_term .. is defined/enforced by the ESC (early surrender charges). Within MIP, a withdrawal by default incurs ESC as a penalty. Penalty amount declines over the 10 Y window, to become $0 after 120M.

There is 1 big flexibility + 1 minor flexibility.

1) Monthly payout is a big flexibility. Assuming 5 ppa payout, within the MIP I would cash out 50% of my initial investment 🙂

2) A minor flexibility .. two fee-waived partial withdrawls during MIP. Here is one realistic timeline.

1. Suppose customerX pays 12k via five installments in M1 M13 M25 M37 M49.
2. In M50, NAV is 55k (close to the 60k total premium), and she withdraws, free of charge, 6% of that i.e. $3300.
3. .. NAV immediately drops by $3300, and monthly payout would follow the reduced NAV.
4. A few years later, when NAV is 50k, she does her second and final 6% free withdrawal, of $3000.

Q: How did I come to accept the life imprisonment of cpfLife?
A: Indeed I might top up to ERS at age 55 and have 450k locked up forever. This is possibly irrational.
A: Note a quarter of my ERS amount is withdrawable if I pledge my property.
A: With CpfLife, I don’t worry about payout_rate drop, though it is absolutely possible within my life time.