For last age 23, female and non-smoker the product has a sum assured $100,000 for 15 years. Premium is $4800 annually limited to 10 years. If there is no claim, the maturity value is projected to be $57,682. The projected maturity value less total premium paid is $9,682 ($57,682 - $48,000).

Actually the plan consists of two components internally. It is actually a “Term” insurance and a “Saving plan”. One insurer provides a term cover of $100,000 for death and TPD last age 23, female and non-smoker for only $81.90 in premium annually. Therefore the difference of 4800-81.90 = $4,718 goes into a “saving” element. By my calculation, if the interest rate is 2%pa than $4,718 contribution for 10 years followed by an outflow of $81.90 annually for another 5 years will give $57,682 at the end of 15 year.

To me 2%pa is a lousy deal because the plan is a 15 years plan. For such a long period, why would anyone want to have to money lock up for so long giving such pathetic return? A young lady of 23 should not have the money locked for so long.

When I explain how the plan actually work, she was dismayed for buying such a lemon product.

Actually when she bought the product, she bought based on product features and the salesperson (from a bank) sold based on product advice. As the saying goes, it takes two to tango and you’ll end up with a salesperson laughing all the way to the bank (he/she was already sitting in the bank) while the customer cries all the way to the bank upon hearing from me how it really works.

Before I end the story, when I did a needs analysis I found that she actually has no immediate needs for death cover because there was no dependent. So the death cover for the above policy was redundant to begin with.