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Chapter 1 Objective
1.0 Definition of Retirement Plan
What is retirement plan? Here is the answer. The process of planning for retirement,
specifically in terms of making financial plans. Most often, retirement planning involves
depositing money into a retirement account, and purposefully saving money for the
future. There are many different types of retirement plans available in different insurance
companies. Most cases, employees are provided with a retirement plan by their employer,
and contributions to the plan are deducted from the employee's paycheck. Some
employers will match a certain percentage of an employee's contributions, adding more
money to their account. Retirement planning includes identifying sources of income,
estimating expenses, implementing a savings program and managing assets. Future cash
flows are estimated to determine if the retirement income goal will be achieved.
In the simplest sense, retirement planning is the planning one does to be prepared for life
after paid work ends, not just financially but in all aspects of life. The non-financial
aspects include such lifestyle choices as how to spend time in retirement, where to live,
when to completely quit working, etc. A holistic approach to retirement planning
considers all of these areas.
The emphasis one puts on retirement planning changes throughout different life stages.
Early in a person's working life, retirement planning is about setting aside enough money
for retirement. During the middle of an individual's career, it might also include setting
specific income or asset targets and taking the steps to achieve them. In the few years
leading up to retirement, financial assets are more or less determined, and so the
emphasis changes to non-financial, lifestyle aspects.
Retirement is one of the most important life events many of us will ever experience.
From both a personal and financial perspective, realizing a comfortable retirement is an
incredibly extensive process that takes sensible planning and years of persistence. Even
once it is reached; managing your retirement is an ongoing responsibility that carries well
into one's golden years.
While all of us would like to retire comfortably, the complexity and time required in
building a successful retirement plan can make the whole process seem nothing short of
daunting. However, it can often be done with fewer headaches (and financial pain) than
you might think - all it takes is a little homework, an attainable savings and investment
plan, and a long-term commitment.
1.1 Purpose of Retirement Plan
Before we begin discussing how to plan a successful retirement, we need to understand
why we need to take our retirement into our own hands in the first place. A retirement
plan is not intended to provide the resources for people to go on a world cruise when they
retire or even necessarily to pay off their mortgage. Instead its purpose is to provide them
with the means by which they can maintain a reasonable living standard after they retire,
and so avoid the need to fall back on the state or on other people in their final years. Most
pension plans being set up around the world today are funded defined contribution
pension plans. The contributions are invested in stock markets around the world and a
fund is accumulated. When the plan member retires, he often has to use the proceeds
from the pension fund to purchase a life annuity.
Private pension plans aren't immune to shortcomings either. Corporate collapses, such as
the high-profile bankruptcy of Enron at the turn of the century, can result in your
employer-sponsored stock holdings being wiped out in the blink of an eye.
Defined-benefit pension plans, which are supposed to guarantee participants a specified
monthly pension for the duration of their retirement years, actually do fail every now and
again, sometimes requiring increased contributions from plan sponsors, benefit
reductions, or both, in order to keep operating. In addition, many employers who used to
offer defined-benefit plans are now shifting to defined-contribution plans because of the
increased liability and expenses that are associated with defined-benefit plans, thus
increasing the uncertainty of a financially secure retirement for many.
These uncertainties have transferred the financing of retirement from employers and the
government to individuals, leaving them with no choice but to take their retirement
planning into their own hands.
While the failure of a social security system may not occur, planning your retirement on
funds you don't control is certainly not the best option. Even with that risk aside, it's
important to realize that social security benefits will never provide you with a financially
adequate retirement. By definition, social security programs are intended to provide a
basic safety net - a bare minimum standard of living for your old age.
Without your own savings to add to the mix, you'll find it difficult, if not impossible, to
enjoy much beyond the minimum standard of living social security provides. This
situation can quickly become alarming if your health takes a turn for the worse.
Old age typically brings medical problems and increased healthcare expenses. Without
your own nest egg, living out your golden years in comfort while also covering your
medical expenses may turn out to be a burden too large to bear - especially if your health
(or that of your loved ones) starts to deteriorate. As such, to prevent any unforeseen
illness from wiping out your retirement savings, you may want to consider obtaining
insurance, such as medical and long-term care insurance (LTC), to finance any health
care needs that may arise.
Switching to a more positive angle, let's consider your family and loved ones for a
moment. Part of your retirement savings may help contribute to your children or
grandchildren's lives, be it through financing their education, passing on a portion of your
nest egg or simply keeping sentimental assets, such as land or real estate, within the
family.
Without a well-planned retirement nest egg, you may be forced to liquidate your assets in
order to cover your expenses during your retirement years. This could prevent you from
leaving a financial legacy for your loved ones, or worse, cause you to become a financial
burden on your family in your old age.
Individual between 30 to 65 years old who want to meet their retirement goal should take
retirement plan. Retirement growth is a single premium investment-linked insurance plan
that pays a monthly guaranteed income. Retirement growth is divided into two stage
which is accumulation stage and payout stage. Accumulation stage is how long you want
to accumulate your fund for. Then you choose the specified number of years that you will
receive the monthly guaranteed income. Payout stage is based on your selected terms for
the accumulation and payout stage, annual guaranteed income ( payable monthly) is
determined as a percentage of gross single premium (refer to the table below).
For example:
2.1 Prudential
Minimum Maximum
Initial Single Premium RM10,000 No limit
Sub-Standard Life RM10,000 RM100,000,000 per life
Mode of payment may be by cash or cheque from any bank.
In pricing policy of prudential retirement plan in Malaysia, insurer can request for one-
time change to their Accumulation and /or Payout term during the Accumulation Stage.
However, revision of the Payout term only is not allowed. If you are changing your mind
with the retirement plan, the NAV of the fund plus the unallocated premium and any
other upfront charges will be refunded to you if the cancellation within 15-day free-look
period. If the cancellation during Accumulation Stage or the Payout Stage, the value of
units and proportion of the insurance charge will be paid out. The refund of the insurance
charge is only applicable for the first 10 policy years.
A one-time insurance charge, based on insurer entry age, will be deducted from the fund
upon inception (refer table below as example of prudential company).
30-45 0.50%
46-50 1.00%
51-55 1.50%
56-60 2.25%
61-65 3.50%
There is few management fund have been charge such as service charge, guarantee
charge, administration charge and processing charge. Service charge is a one-time
RM100 service charge is applicable at the point of purchase. Guarantee charge is 0.10%
pea of the unit value. Administration charge is during the payout term, a flat charge of
RM2 per month will be applicable. Last but not least, processing charge is a charge of
RM25 will be applicable for any change in the accumulation term and for each partial
withdrawal request made.
Current Age 45
Age of retirement 67
Household income $50,000
Current retirement savings $100,000
Annual retirement savings 8% ($4,000 annually which will increase as
your income increases)
Expected income increase 2%
Years of retirement income 35
Income required at retirement 90%
Investment Returns and Inflation
Rate of return before retirement 7%
Rate of return during
Guaranteed retirement
Guaranteed Cash Payment as Percentage (%) of insured amount 4%
Expected inflation rate Premium Payment Team 3%
Cash Payment
Are you married? 6 - Pay 10- Pay 15- Pay 20 -Pay No
Period
Include Social Security? No
1 to 6 policy 6.00% 4.00%
Result Summary3.00% 2.00%
Years until retirement 22
year
Your last years income $75,783
7 to 10 policy 10.00% 4.00% 3.00% 2.00%
Estimated annual retirement expenditures $68,205
year
Your ending balance $0
11 to 15 policy 10.00% 8.00% 3.00% 2.00%
year
16 to 20 policy 10.00% 8.00% 8.00% 2.00%
year
At Allianz, We understand that retirement needs vary among individual. If you deposit
Your Guaranteed Cash Payment with us and depending on your retirement income
selection, you can anticipate a potential stream of income upon reaching your retirement
age of 55 or 60 at your nearest birthday in the form of Deferred Retirement Benefit and/
or Enhanced Retirement Benefit. The Guaranteed Cash Payment and Enhanced
Retirement Benefit are payable from Account1 Value while Deferred Retirement Benefit
is payable from the accumulated deposited Guaranteed Cash Payment with Us and/or
Account2 Value. This is to ensure that you will get a flexible retirement income.
Premium Charges
Monthly Fee
(a) Policy Fee we currently charge a Policy fee of RM7.42 (inclusive of GST) per month.
The maximum Policy fee is RM12.72 (inclusive of GST) per month.
(b) Cost of Insurance Cost of Insurance will be deducted monthly from Policy Account1.
The Cost of Insurance rate will increase as you grow older.
(c) Crediting Spread we charge a fee (Crediting Spread) for managing the Universal Life
Fund. The fee is charged depending on the performance of the Universal Life Fund as
shown below.
Gross Investment Return per month Current Crediting Spread per month
before tax
Less than 0.333% 0.333%
0.333% to 0.415% 0.667%
0.416% to 0.665% 0.833%
0.666% and above 0.958%
A surrender charge will be imposed on Your Account1 Value upon early voluntary
termination of the basic Policy.
The insurance coverage period is the retirement age of 60 years old nearest birthday with
the insured amount of RM55, 000 and the Total premium paid which is RM198,
000.Deferred Retirement Benefit = yearly non-guaranteed income which is payable based
on the remaining Account2 Value starting from the end of Policy Year immediately after
the Life Assured has attained age 60 until the policy matures. Total Projected Deferred
Retirement Benefit is RM74, 138. Enhanced Retirement Benefit = yearly non-guaranteed
income equivalent to 2% of Account1 Value which is payable starting from the end of
Policy Year immediately after Life Assured has attained age 60 until the policy matures.
Total Projected Enhanced Retirement Benefit is RM162, 049. Lastly, Maturity Benefit =
remaining Account1 Value as at policy maturity which have the amount of RM439,675
.The total benefits received if the plan is held until maturity is RM74,138 + RM162,049
+RM 439,675.
The insurance coverage period is same with the projection under high scenario. Deferred
Retirement Benefit = yearly non-guaranteed income which is payable based on the
remaining Account2 Value starting from the end of Policy Year immediately after the Life
Assured has attained age 60 until the policy matures have the total of RM46,389 .
Enhanced Retirement Benefit = yearly non-guaranteed income equivalent to 2% of
Account1 Value which is payable starting from the end of Policy Year immediately after
Life Assured has attained age 60 until the policy matures have the total amount of RM
101,739 .Lastly, Maturity Benefit = remaining Account1 Value as at policy maturity with
the amount of RM255,879. The total benefits received if the plan is held until maturity is
RM46, 389 + RM101, 739 + RM 255,879.
Great Eastern has strongly recommended this retirement plan due to the benefits at a
glance. There is seven benefits we can gain from this retirement plan which are:
To protect your long-term cash savings, you should choose between premium payment
term of either 5 or 10 years depending on your needs and goals.
Insurees can grow their savings with the yearly guaranteed survival benefits. With an
attractive annual payout starting from the end of the first policy year, insurees can receive
up to 170% of their basic sum assured depending on the selected policy term. They can
opt to withdraw your survival benefits yearly or accumulate them with the Company for
even bigger savings at the maturity of the plan.
20 years 25 years
1-5 6% 6%
6- Maturity 7% 7%
TOTAL 135% 170%
For added assurance, Great Premier Wealth even increases your sum assured gradually,
up to 160% of the basic sum assured at no extra cost to you. This extra sum of money
will provide added security should the unexpected happen.
The additional sum assured payable on top of your basic sum assured is as follows:
Should death or TPD occur before the end of the policy term, individual can be safe in
the knowledge that their loved ones will be looked after. They will receive the basic sum
assured; additional sum assured, if any; accumulated survival benefits, if any; cash bonus
(including any accumulated cash bonus), if any; and terminal bonus, if any; in accordance
with the provisions of the policy.
If accidental death occurs before the end of the policy term or before age 65 years next
birthday (whichever is earlier), insurees loved ones will receive an additional amount of
100% of the total of the basic sum assured and additional sum assured, if any.
In the event of Total and Permanent Disability (TPD), future premiums will be waived up
to a maximum basic sum assured of RM2,000,000 per life and the Company shall pay the
basic sum assured, not exceeding RM2,000,000, in 3 annual installments with the first
being a lump sum of the basic sum assured or RM1,000,000 whichever is lesser, and the
balance of the basic sum assured (if any) will be payable in two equal annual installments
up to a maximum of RM500,000 each. In addition, accumulated survival benefit (if any)
and cash bonus (if any) will be payable in one lump sum whereas additional sum assured
(if any) and terminal bonus on TPD (if any) shall be advanced in the same manner,
interval and duration as the basic sum assured.
Child Lien
In the event of death, accidental death or TPD of the child below age 5 years next
birthday, the benefit payable shall be subject to the following child lien:
Maturity benefit
Upon the maturity of Great Premier Wealth, insurees will receive 160% of the basic sum
assured; survival benefits (including any accumulated survival benefits), if any; cash
bonus (including any accumulated cash bonus), if any; and terminal bonus, if any.
Maturity Benefit will be paid on the maturity date of the policy which falls on your 25th
policy anniversary. The estimated Maturity Benefit is illustrated as follows:
1. For those who can apply must have the minimum entry age is 30 days attained
age and the maximum entry age is 55 years next birthday.
2. The minimum sum assured for this plan is RM10,000. Any application for the
minimum or higher sum assured is subject to the applicable underwriting
requirements.
3. Some of the exclusive in the plan that will be no benefit is payable under the
following circumstances including death during the first policy year as a result of
suicide, while sane or insane, TPD resulting from self-inflicted injuries, while
sane or insane. The exclusions highlighted here are not exhaustive. Full details are
available in the policy document.
4. Insurees can pay your premiums by credit card, bankers order, internet banking,
auto debit, cheque or cash. They have the flexibility to pay their premium
annually, half-yearly, quarterly or monthly (by credit card, bankers order, internet
banking or auto debit).
5. Benefits received from Great Premier Wealth are generally non-taxable and
premiums paid may qualify for tax relief. However, tax benefits are subject to the
Malaysian Income Tax Act, 1967, and final decision of the Inland Revenue Board.
People enjoy their retirement after working for so long period of time, some
people do enjoy their retirement life yet some people are worrying about their retirement
life as well. They worry about use up all their savings; they worry some emergency cases
happen that required a lot of cash for example accident, sicknesses and so on. Hence,
people tend to buy retirement plan from insurance company. A lot of insurance companies
are providing retirement plan now. Here, we are doing comparison of retirement plan
between these three companies which is retirement plan of Prudential, Allianz Retire Plus
and Great Eastern Premium Wealth. A very simple question people may ask, how to
choose a suitable retirement plan. Actually there is no any prefect plan for anyone of the
insurer because every individual are looking for the different criteria or requirement. A
plenty people more emphasize on how much should them pay for the premium. With the
different features and benefits that apply to the various types of individual retirement
accounts and plans, choosing the one that is most suitable can give you gray hairs before
they are due. In some of the cases, the process is easier because choices can be narrow
down by eliminating the plans for which an individual is ineligible.
For Allianz Retire Plus, with multiple retirement income options, this unique plan gives
you the flexibility to choose how you want to retire depending on your needs. You can
either choose to enjoy a yearly income from the end of the first policy year for as long as
20 years, or to deposit with us until your golden years for a chance to reap potential
investment returns that will grow your retirement funds. Whats more? You are protected
until the age of 81 with the option to enhance your protection with Waiver of Premium
Rider. Best of all, this plan offers 4 different premium payment terms so that you can reap
all these benefits and may not have to worry about continuing to pay the premiums after
You have retired. The benefits of selecting Allianz insurance company are:-
Allianz RetirePlus is designed with 4 types of premium payment terms to cater for
different affordability.
You may enjoy potential upside on your account value depending on the
underlying Universal Life Fund performance.
Enhance your coverage with the optional Waiver of Premium benefit so that you
remain protected under this plan should any unforeseen event befalls you.
People tend to buy Great Easterns retirement plan is because it has individual long-term
financial aspirations without the commitment of a prolonged premium payment term.
Great Eastern has strongly recommended this retirement plan due to the benefits at a
glance. There are seven benefits we can gain from this retirement plan which are: Short-
term commitment for premium payments, guaranteed survival benefits throughout policy
term, Cash bonuses, increasing protection with additional sum assured, Death or Total
and Permanent Disability (TPD) benefit, double sum assured for accidental death and
Maturity benefit. With an attractive annual payout starting from the end of the first policy
year, insurees can receive up to 170% of their basic sum assured depending on the
selected policy term. They can opt to withdraw your survival benefits yearly or
accumulate them with the Company for even bigger savings at the maturity of the plan.
Should death or TPD occur before the end of the policy term, individual can be safe in
the knowledge that their loved ones will be looked after. They will receive the basic sum
assured; additional sum assured, if any; accumulated survival benefits, if any; cash bonus
(including any accumulated cash bonus), if any; and terminal bonus, if any; in accordance
with the provisions of the policy. Additional sum assured is an additional percentage of
basic sum assured which will be payable upon occurrence.
Typically, retirement plan insurance services are generally covered Death and Total
Permanent Disability (TPD). Under the Death coverage is that policy holders are
covered during the plan still going on and under TPD coverage is policy holders are
before 60 or 65 years old. Policy holders which are faced death or permanent disable will
receive net asset value of the fund or all and potential increment of their current single
premium.
Lately, vary of insurance company starting to introduce their own retirement plan. In
order to gain competitive advantages, some company introduced others benefits like
flexible withdrawals, higher guaranteed returns and others. So, we interpret some
company to determine which companies have the better advantages.
3.1 Prudential
Prudential has a retirement insurance plan, named PRUretirement growth. This retirement
plan is a single premium investment-linked that pays a monthly guaranteed income and
has the potential to grow in investment
1) The retiree can receive a guaranteed monthly income during the payout stage
regardless of the retirees investment value after the accumulation stage. Besides, the total
amount of the monthly income the retiree received during the payout stage will definitely
be more than the single premium that the retiree initially invested. Furthermore, the
remaining amount of the retirees investment value at the end of the payout stagewill is
paid out to the retiree in a lump sum.
2) The retiree can make a partial withdrawal at any time and for any amount, as long as
the amount subject to a minimum of RM100 and a remaining fund value that is no less
than RM10000 or 10% of the single premium, whichever is lower. However, any flexible
withdrawals will cause the single premium and guaranteed income to be reduced
proportionately.
3) It also covers any unforeseen circumstances, such as death and total permanent
disability (TPD). In the event of death ortotal permanent disability (TPD) before age 60,
the retiree will receive net asset value of his or her fund, subject to minimum of RM5000
or 125% of his or her current single premium.
Guaranteed Income
Flexible Withdrawal or Deposit Withdrawal only
Cash Bonus
Maturity Benefits
Death
TPD
3.2 Allianz
Allianz RetirePlus is a universal life plan that matures on the policy anniversary when the
retiree has attained the age of 81 nearest birthday.
1) The retiree will receive yearly guaranteed cash payment from end of first policy year
until the end of twenty policy year. Allianz RetirePlus has different flexible premium
payment option of 6, 10, 15, and 20 years. Otherwise, the retiree can also choose to
withdraw or to deposit the guaranteed cash payment to Allianz to accumulate with the
interest at a rate to be determined by Allianz which may vary from year to year.
2) It provides coverage upon death and total permanent disability (TPD). Both Deferred
Retirement Benefit and Enhanced Retirement Benefit are not guaranteed and depend on
investment returns. However, coverage upon total permanent disability is available only
if total permanent disability happens prior to the age of 65 years old on the policy
anniversary.
Guaranteed Income
Flexible Withdrawal or Deposit
Cash Bonus
Maturity Benefits
Death
TPD
3.) Great Premier Wealth also covers death or total permanent disability (TPD) benefits to
the retiree. If death or total permanent disability (TPD) occur before the end of the policy
term, the retirees family will receive the basic sum assured, additional sum assured,
accumulated survival benefits, cash bonus, and terminal bonus, in accordance with the
provisions of the policy. If accidental death occurs before the end of the policy term or
before age 65 years, policy holders companion will receive an additional amount of
100% of the total of the basic sum assured and additional sum assured.
Guaranteed Income
Flexible Withdrawal or Deposit
Cash Bonus
Maturity Benefits
Death
TPD
The table below shows the difference between the retirement plans.
Guaranteed Income
Only withdrawal
Flexible Withdrawal or
Deposit
Cash Bonus
Maturity Benefits
Death
Total Permanent Disability
Through the given coverage of each policy, Great Premium Wealth have a wider
coverage compare with others. It covered some benefits that others company provided yet
flexible withdrawal or deposits. Flexible withdrawal or deposits might not be a
disadvantage for Great Eastern not to have it in his retirement insurances. It might
whether the consideration of get Great Eastern retirement insurances as insurances
generally consider as a long term investment so the flexibility does not affect much.
Besides, Great Premium Wealth has a unique way to attract potential customers which
is providing cash bonus. It gives out yearly and it helps to booster policy holders savings.
Prudential is the sixth largest seller of annuities in the U.S., with a market share of 7%,
and the fourth largest seller of variable annuities with a market share of close to
10%. More than 95% of the companys annuity sales last year were through variable
annuity products. Prudential uses a distribution network of independent financial
planners, wire houses, banks, and insurance agents including Allstates agency
distribution force with over 300 wholesalers across the country. Variable annuities offered
by the company allow policyholders to invest in proprietary and non-proprietary mutual
funds represented as separate account interests that provide returns based on the
underlying investment portfolio.
The table above shows the changes in terms of retirement plan, medical insurance, life
insurance, dental insurance and disability insurance offered by Prudential Company
during year 2007 to year 2011. For variable annuities, investment returns on contract
holder funds are generally attributed directly to the contract holder, and Prudentials
revenue comes primarily from fee income from account values. Account values are
driven both by sales and market changes. In response to recent market volatility,
Prudential had to adapt its products to the environment to manage its risk profile. As a
result, net sales in 2013 fell 71% after a 1% increase in 2012. However, equity market
appreciation led to a $20 billion positive change in the market value of contract holder
funds during the year allowing a 14% increase in ending total account value. As a result,
fee income, which has consistently been around 2.5% of the account value for the last
four years, grew 17.5%, despite a decrease in sales.
Prudential has reported strong sales of its Prudential Defined Income Variable Annuity
(PDI) product, which accounted for 7% of total sales in 2013. We expect moderate
growth in sales, combined with market fluctuations, to lead to moderate growth in
account values in the coming years. This will have a concurrent effect on fee income for
Prudential.
The insurance business line of Allianz generated the largest amount of revenue in the last
two years. In 2014, the revenue of L/H sector amounted to 67.33 billion euros, while
property/casualty insurance generated 48.32 billion euros of revenue and asset
management sector reported 6.39 billion euros of revenue. The operating profit grows
from year to year since 2011 and reached 10.4 billion euros in 2014. The dividend of
Allianz paid to the shareholders was equal to 4.5 euro per share for the years 2010-2012.
In 2013, the company decided to increase the dividend to 5.3 euros and subsequently to
6.85 euros in 2014. This statistic presents the total revenue of Allianz Group from 2005 to 2014.
The revenue of Allianz Group increased from approximately 106.45 billion U.S. dollars in 2010
to approximately 122.25 billion euros in 2014.
Allianz aims to achieve annual earnings per share (EPS) growth of 5 percent on average
from 2016 to 2018. The Group will target a total return on equity (RoE) by 2018 of 13
percent, adjusted to exclude unrealized capital gains and losses on bonds and other items.
To meet those targets, the Property-Casualty segment will seek to deliver a combined
ratio of 94 percent or better. The Life/Health segment will aim to deliver RoE of at least
10 percent in all of its operating entities.
The Group will also seek 1 billion euros in recurring, annual productivity gains by 2018,
especially by implementing digital processes globally. Those gains will be reinvested in
technology, human resources and growth.
Great Eastern has shown a very positive growth in its overall performance towards its
revenue. In total assets, there has been a rapid increment from 2007 to 2014 about 101%.
This shows the growth of the assets is good to sustain in a long-term business. Other than
the assets of the company, we can look that the Gross Premium Income (GPI) are
increasing steadily from year 2007 to year 2014. There is an increase of 66.4% from
RM4,073.5 million in 2007 to RM6,779.4 million in 2014.
Below is a table of investment return which will be used to fund the return for the
customers:
2010 10.79%
2011 6.18%
2012 8.87%
2013 4.07%
2014 3.90%
*The expected investment return in 2015 is 6%.
*The past performance may not be a guide to future performance which may be different
These are accurate and actual values of fund in investment return which will be used as
return to the customers. It has also been approved by Bank Negara Malaysia. These
values prove that the company can continue providing funds to its customers.
The concept of this fund is, where in 2010, there are 10.79% of fund available while
Great Eastern has promised its customers that there will be a 7% return. So from the
10.79%, a 7% of fund will be used to fund its customers, and the balance fund available
of 3.79% will be kept in the pool until the next year.
Then in 2011, the fund of the year is only 6.18%, since the company has promised a
return of 7%, so another 0.82% of fund will be used from the previous balance pool of
3.79% to top-up to the fund so that the company are able to payout a return of 7% to its
customers.
Next in the year 2012, the fund of that year is 8.87% which are more than the promised
7% fund return, so after returning the 7% fund to the customer, the balance of 1.97% will
be added into the balance pool of fund available for the next fund return, so the balance
pool will then be 4.84% as of the year 2012 until future fund return to the customers.
This is basically the concept of this participating fund by Great Eastern to its customers.
They will payout their promised 7% yearly return to its customers, and the balance will
be kept in a pool for the next return to see if there is any-top-up required in order to reach
a 7% return.
Comparison:
As a comparison among these three top insurance companies in the world, we have come
to a conclusion based on the policy growth according to their revenue performance. It is
clearly shown that Allianz Company shows a better policy growth than the other 2
company.
The net profit earned by Allianz in 2013 is 3.147 million US Dollar, while Prudential and
Great Eastern only earned a net profit of 1.515 million US Dollar and 1.537 US Dollars
respectively. The profit earned by Allianz is doubled the profit earned by Great Eastern
and Prudential. Despite being a globally known insurance company and being top in the
charts, Allianz is able to create a very strong and stable financial status. Not only the
financial condition, but also the services provided by Allianz are professionally fit in the
industry and economy which also affect the sales and profit earned by the company.
Chapter 5 Conclusion
There is no risk-free investment and the best retirement plan. The reason every working
person doesnt have identical investments for retirement savings is that we all differ in
three particularly important ways: how long we have until retirement, how much weve
already saved, and how much money well need when we get there.
However, from the analysis we had did, we take Great Easterns plan as the best choice to
those who plan to open a retirement account. Great Eastern offers generous yearly
survival benefits starting from the end of the first policy year, non-guaranteed cash
bonuses, an increasing protection and an attractive maturity payout, which includes 160%
of your basic sum assured. Besides that, Great Eastern also covered cash bonus that the
other two companies not included.
Appendix I
Reference
David Littell (2014), Retirement Risk Solutions, The American College
Alicia H. Munnell and Catherine Taylor, Social Security Bulletin, Vol. 64, No. 3,
2001/2002