Vincent Ng asked 10 months ago

I was introduced by Cimb RM regarding Solitaire Legacy Plan for my wife(54yrs old) from Cimb SG. The plan is one lump sum premiun payment(SGD112K) and a loan from Cimb SG(SGD288K with interest of 2.58%) with coverage of SSGD 1m. On the 6th Year onwards we will receive SGD16,800 – 7400(interest of SGD288)= SGD9400 per annum until death or transfer this to our children. May i know the pro and cons about the above.

1 Answers
CHING FOO LIEU Staff answered 10 months ago

Vincent Ng, welcome to AskCF

Noticed that you scheduled for an upcoming 1on1 as well.

Just from what you’ve stated over here:

The pros of the structured product are:

1. Bank need to make that SGD 9400 for you annually for you, even if the market is depressed. Even though it’s guaranteed, you may want to check the fine prints if there is any condition where bank can ‘call back’ the product (aka terminating the plan).

2. The SGD 1 mil extra coverage is nice, but if your focus is not on the annual income, then it is a very expensive way to get a SGD 1 mil coverage

The cons of the structured product are:

1. SGD 9400 annuity income is hardly enough to sustain a comfortable lifestyle.

2. Not sure about your age, but you could be losing out on growth opportunity on your SGD 112k capital

3. To relate to point#2, the annuity income does not commence immediately (you need to wait 5 years for that). In the next 5 years, you could have been able to grow SGD 112k to say, 150k, and then use that 150k capital to properly invest into asset class which gives a consistent 6% annual cash flow which will gets you circa 9k/year anyway. But if you lack the time, motivation, knowledge or insights on how to do this on your own or take charge of the matters into your own hands, then the structured product may be your next best option.