AVIVA MyLifeSavingsPlan | More For Child Savings Than Retirement!
Why is it MyLifeSavingsPlan?
I personally think it's simply because it's SAVINGS for a LIFETIME? (Till age99 maturity to be exact).
Actually if you own this policy, the life long saving can even be seen as saving for your next generation.
Some background on MyLifeSavingsPlan?
PRUWealth is the first solution of this nature from my memory.
Then came Manulife ReadyBuilder Plan. AVIVA may be the third and latest insurer to issue a "Till age99" endowment plan A.k.a Perpetual Endowment plan.
This post is more for how this plan can help your financial goals. To read brochure, click here.
If you've a child on the way or an infant now, how to use MyLifeSavingsPlan to plan for child education costs?
The AVIVA MyLifeSavingsPlan can be tailored to limited premium payment terms of 5, 10, 15, 20 or 25 years.
If your child is not born yet and you would like to start saving now, you can actually do so by purchasing a policy on yourself. Start accumulating savings into this policy today for his/her future education needs.
Below is an snapshot of an analysis done for a private client aged 39 and it can be used to illustrate the concept.
In 20years time, there is a 1.55%p.a guaranteed growth in capital.
A $11,992.50/year plan for 10years premium plan (total $119,925) has a guaranteed $152,304 if a full surrender is done at year20. The projected value with non-guaranteed components on the benefit illustration is at $175,142-$208,864.
With non-guaranteed components, projections can be up to 3.61%p.a (when illustrated at 4.75% investment return).
If you use this plan, instead of fully surrendering the policy at year 20, you can do a partial withdrawal instead to fund your child's education costs.
The remaining value in the policy can be accumulated further to help for another financial goal such as for your own retirement.
How does AVIVA MyLifeSavingsPlan compare with Manulife ReadyBuilder Plan
This comparison was done for the same private client.
As mentioned above, the guaranteed yield p.a for AVIVA MyLifeSavingsPlan in 20years time is 1.55%p.a. It compares well against the 0.44%p.a guaranteed yield in the Manulife ReadyBuilder Plan.
What if PAR fund performance is compared?
PAR fund average performance over the last 3years is superior for Manulife at 4.90%p.a. The AVIVA plan performance is at 3.87%p.a.
On the other hand for average over last 5years, PAR fund performance is almost identical at 3.29%p.a and 3.28%p.a respectively.
MANULIFE PAR returns below
AVIVA PAR returns below
Lastly, the withdrawal methods from the two plans are identical.
Refer to next section...
How does a withdrawal from AVIVA MyLifeSavingsPlan work?
Option 1: WITHDRAWAL OF ACCUMULATED REVERSIONARY BONUS
Reversionary Bonus is non-guaranteed, but once declared and vested, it forms part of the guaranteed benefit of the Policy. You may choose to either fully or partially withdraw the cash value of any accumulated Reversionary Bonus.
Option 2: PARTIALLY SURRENDER THE POLICY BY REDUCING THE SUM ASSURED
You can decide how much of the partial Cash Surrender Value you'd like in a lump sum. The plan's sum insured will be reduced after that (plan kind-of becomes smaller)
Claim for these 4 situations under "Life Stage Benefit"!
The AVIVA MyLifeSavingsPlan has this unique feature.
Starting from the 5th Policy Year, the Life Stage Benefit* of 3% of the prevailing Sum Assured can be claimed upon the occurrence of a Life Stage Event.
This benefit can be claimed up to 2 times per Policy and limited to one Life Stage Event per Policy Year.
*Subject to the followings conditions:
a) satisfactory proof to show evidence of the occurrence of the Life Stage Event must be submitted
together with the application;
b) the application must be submitted within 90 calendar days following the occurrence of the Life
Stage Event;
c) provided the Policy has not been converted to a Reduced Paid Up policy; and
d) with the consent of the Policyholder if the Life Assured is not the Policyholder of this Policy.
If you've a 12years old child, how to use MyLifeSavingsPlan to plan?
If your child is 12years old, there is a chance that he/she enters university and buys a house in the next 10-20years.
By owning this plan, you may get 2x of the Life Stage Benefits. Do note that benefits start after 5th policy year. More in the illustration below:
MyLifeSavingsPlan is NOT for pure retirement planning but better for flexible long term savings
The AVIVA MyLifeSavingsPlan does not pay out retirement cashflow which I feel is very important for a retiree.
Other plans from AVIVA are more suitable, check the link below.
In that post, I'd show you EXACTLY HOW AVIVA MyRetirementChoice has an EVEN higher yield if it's planning for cashflows till age85.
Retirement Planning With AVIVA MyLifeIncome & AVIVA MyRetirementChoice
If you use the AVIVA MyLifeSavingsPlan as part of a long term saving strategy to accumulate some long term wealth then it is very useful.
The flexibility to withdraw makes it very versatile for funding multiple long term gains.
PRUWealth and Manulife ReadyBuilder Plan provide similar planning concepts. In this post below, I'd show you how $30,000 becomes more than $281,000 potentially as illustrated in each of the plans!
PRUWealth and Manulife ReadyBuilder not purely for retirement
AVVIVA MyLifeSavingsPlan Vs a specialised child education plan
All insurers have their own child education endowment.
For AVIVA, MyEduPlan is the specialised child education endowment plan to fit the comparison.
It requires that you to choose your payout at the start.
To illustrate the AVIVA MyEduPlan's concept, cash benefits are payable every year for four consecutive years. Payouts can be from Age of 19 or 21 Age Next Birthday (ANB) onwards.
The choice of payouts is fixed at start of policy purchase.
Payout 1 – 40% of the chosen Sum Assured
Payout 2 – 20% of the chosen Sum Assured
Payout 3 – 20% of the chosen Sum Assured
Payout 4 – 20% of the chosen Sum Assured (With maturity)
On the other hand, MyLifeSavingsPlan does not have 4 yearly fixed payouts but has instead has flexibility in withdrawal.
If for some reason you do not need the funds saved up (for example your child gets a scholarship), you can choose to not withdrawal anything at age19 or 21.
Instead, withdrawal from plan is pushed back to further grow the money.
Last words and how to get started on retirement planning
MyLifeSavingsPlan can be your flexible education savings and retirement savings at the same time.
It has discount tiers at $100,000 sum assured and $150,000 sum assured.
If you're looking to find out more on retirement planning, contact me below for a preliminary discussion and I'd get in touch with you real soon to make positive changes! See you!
Last updated on October 15th, 2019 at 12:28 am
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