Will you lock up $25,000 to get free mobile subscription for the rest of your life?

Before you read further, this article is not sponsored and the reason why I am using NTUC Income’s VivoCash Prime insurance plan as a reference in this article is simply because it’s way too easy generate an online quotation with relevant benefits illustrations through their online life insurance platform without going through an insurance agent. The sweetener in buying online is that if I choose to buy online, they offer an extended free-look period of 90 days (just in case I get buyer’s remorse later on).

It’s interesting to know that if you’re considering to purchase a life insurance product these days, there are so many different ways to do that.

If you’re allergic to insurance agents like me (okay, there are a few trusted insurance agents that I still consult), you can now choose to buy your life insurance online. Woohoo!

Retirement planning 101

When planning for my retirement, I focus on 2 things.

1. Build a comprehensive retirement portfolio that does not run out of money before I die.
2. Optimise my fixed and discretionary expenses to keep them as low as possible without affecting my preferred standard of living.

There’s only that much I can do to reduce my fixed expenses so my alternative was to find additional income streams that provide guaranteed income that can pay for these fixed expenses for the rest of my life.

By doing this, I avoid paying for these fixed expense with my retirement portfolio.

Why I’m considering NTUC Income’s VivoCash Prime product

Long time readers would know that I’m in favour of buying term insurance and investing the rest on your own. That’s why I’m using robo advisors like AutoWealth to invest my money. My mindset remains unchanged.

The reason why I’m evaluating NTUC Income’s VivoCash Prime is because its coverage is up to 100 years old. That also means it will provide me with annual cash payouts till the age of 100. At the age of 100, the policy will mature and return me all the premiums paid and around 22% returns.

For your information, I always plan my retirement up to the age of 100.

VivoCash Prime also ticks the box for someone like me who has commitment issues. Hell, I don’t even re-contract my mobile and internet subscription.

Since I was able to save and pay for my overseas property in Cambodia in cold hard cash within 3 years, I think I’ll be comfortable with minimum 5-year premium term offered in VivoCash Prime.

How I plan to get free mobile subscription for life

Remember that I’m still investing a larger percentage of my monthly savings through various investment channels and I am not reducing my monthly investment budget. This investment strategy to build a decent retirement portfolio will not change.

A recent salary increment allowed me to save an additional $5,000 per year so I’m considering to use this additional money for VivoCash Prime.

I generated an online quotation for VivoCash Prime using NTUC Income’s online life insurance platform with my intended budget of $5,000 for 5 years as the premium terms.

Here are the results.

By paying a total of $25,000 annually for 5 years, I will receive a guaranteed cash payout of $525 each year up till the age of 100. I’m ignoring the non-guaranteed cash payout of $213 at investment of 3.25%, treating that as icing on the cake if I do receive that non-guaranteed payout.

With my retirement expenses projected to be around $40,000 each year, $525 doesn’t look like much in the grand scheme of things. It works out to be $43.75 per month, which is enough to pay for my monthly mobile subscription.

I’m 36 this year and we’re talking about 59 years of mobile subscription fees if I survive to become a centurian, netting $30,975 in total payouts. At any point in time if I were to die, I’ll get all my money back because a guaranteed amount of $28,027 will be paid out as death benefit. That’s around of 112% of the $25,000 total premiums paid.

Does it even make sense to do this?

I know it can sound crazy to put $25,000 into something as frivolous as a free mobile subscription for life. But what if we 10X this? If I set $250,000 aside to receive $5,250 each year, what can that pay for?

In my case, $5,250 could easily pay for the yearly premiums of my health insurance for the rest of my life. What do you think about having free health insurance for the rest of your life, not having to worry about hospitalisation bills, ever?

If you don’t already have an investment strategy to build up your retirement portfolio, you shouldn’t be considering purchasing insurance policies with the objective of income generation to pay for expenses. Your money could be better spent on accumulating capital gains through more aggressive investments.

In my case, I’m already doing many things to build my retirement portfolio.

• Monthly investments through my robo advisor platform.
• Contributing cash top-ups to my CPF Special Account through Retirement Sum Top Up (RSTU) scheme to hit Full Retirement Sum in 4 years’ time.
• Contributing the maximum limit of my Supplementary Retirement Scheme (SRS) account each year.

Considering all the activities above, I feel that budgeting $5,000 per year for VivoCash Prime is only a small portion of everything I’m doing for retirement planning.

You won’t trust Mickey Mouse to manage your portfolio so there’s no reason to trust Mickey J to make insurance decisions for you either. The contents in this article should be considered as entertainment until you do your own due diligence by spending time researching and getting advice about insurance products and make your own informed insurance decisions.

Photo by Oleg Magni on Unsplash