During this week, I will post a series of Great Eastern Insurance Life Assurance products review. An analysis will be posted everyday from Monday to Friday as scheduled below:
- Monday: Greatlife Portfolio Insurance (Regular premium investment-linked plan)
- Tuesday: Supreme Living Care Plus (Whole life living participating assurance plan)
- Wednesday: Great Junior/Income Advantage Series 2 (Whole life income plan)
- Thursday: Great Eduplanner (Education Endowment Plan)
- Friday: Supreme Care (Whole life non-participating plan)
In this article, I will show you the details, benefits, features and popular riders of the bestselling regular premium investment-linked plan from Great Eastern: GREATLIFE PORTFOLIO INSURANCE (GPI), also known as GREAT PROTECTLINK INSURANCE. Before I introduce the features to you, let’s look at the reason why GPI is a bestselling insurance product
Why People Love GPI
Almost 90% of my clients own a Greatlife Portfolio Insurance plan. People prefer GPI for the following reasons:
- GPI is the only all-in-one plan, which will give you all the necessary protection in one single plan. If you only want to own one life insurance policy in your whole life, this is the best plan for you.
- GPI provides flexibility for policyholder to alter the protection, supplementary benefits, premium increase/decrease. This flexibility enable you to change the overall protection according to your needs in different stages of life.
- GPI allows you to decide the investment strategy of your allocated premium. You can choose to invest in more aggressive portfolio or conservative funds, switch between funds, and also reallocate your premium apportionment at any point of time.
- GPI allows you to redeem your investment return without the need to surrender the policy. It is also not in the form of policy loan where you need to pay interest. Just fill in a form to redeem the cash value by selling off a certain number of unit fund.
- GPI is a very transparent insurance products that shows you in details where your money goes after paying premium.
- GPI can be designed in a way that it is sometimes even cheaper than a term policy. You can buy a GPI that maximizes protection. You can also own a GPI that maximizes cash value. Most of the time, people will choose a GPI designed in between the two extreme. Anyway, it all depends on the client’s personal needs and budget. GPI is like Web 2.0 – can be customized to suit a person’s preference. ( Highly customizable)
- Premium holiday is allowable at any time, on your own comfort, without interest charges.
- For younger folks, GPI can provide a very comprehensive protection with affordable premium.
GPI is a whole life regular premium investment-linked insurance plan. The premium is payable until age 99 with as low as RM100 per month. In contrast to single premium policy, regular premium policy requires the policyholder to pay a fixed amount of premium in a regular basis, most of the time until the policy matures. A policyowner may cease premium payment at any time. The policy will lapse if the Total Investment Value (TIV) falls to zero and below. The policy values of this plan will vary directly with the performance of the unit funds.
Cash Value ties directly to the Funds’ Performance
A policyowner can choose to invest in one or more of these unit funds:
- Lion Balanced Fund – A fund which invests in a mixture of equities (ranging from 40% to 60%) and fixed income securities. This fund seeks to provide medium to long-term capital appreciation, with a moderate level of volatility.
- Lion Growth Fund – A fund where 70% to 100% of the investment instruments are equities, which may be volatile in the short term. This fund seeks to provide medium to long-term capital appreciation.
- Dana Restu (formerly known as Barakah Fund) – A fund where 70% to 100% of the investment instruments are equities, which may be volatile in the short term. This fund seeks to provide medium to long-term capital appreciation. Dana Restu invests in Syariah-approved securities.
- Lion Fixed Income Fund – A fund which invests in fixed income securities like government and corporate bonds (ranging from 40% to 95%) with the balance invested in cash and cash equivalents. This fund seeks to provide consistent return at low levels of volatility.
- Lion Progressive Fund – A fund which invests in a mixture of equities (ranging from 50% to 90%) and fixed income securities. This fund seeks to provide medium to long-term capital appreciation, with a moderate-to-high level of volatility.
- Dana Sejati (formerly known as Mauzuun Bond Fund) – A fund which invests in fixed income securities like government and corporate bonds (ranging from 40% to 95%) with the balance invested in cash and cash equivalents. This fund seeks to provide consistent return at low levels of volatility. Dana Sejati invests in Syariah approved securities.
- Lion Strategic Fund – A fund which invests in a mixture of equities, fixed income securities and money market instruments. There is flexibility in asset allocation as this fund may invest solely in fixed income securities or equities. This fund seeks to provide medium to long-term capital appreciation, with a moderate level of volatility.
You can get more information on the investment-linked funds at Great Eastern company homepage. Unit fund prices is updated daily and previous year annual investment report are also available for download if you are a policyholder.
The basic sum assured covers death and total permanent disability (TPD) until age 99. There are 4 situations which the policy will cease:
- Death of the policyholder – Total benefit of sum assured plus Total Investment Value (TIV) will be paid to the beneficiaries
- Total Permanent Disability – Total benefit of sum assured plus TIV can be claimed by the life assured. Alternatively, life assured can opt to claim only the basic sum assured, and left the TIV in the policy if waiver premium rider is attached. For this case, the policy will still carry on
- Zero cash value – When there is no TIV left in the policy (due to insufficient funds), the policy will cease automatically
- When the policy mature at age 99, and I don’t see any reason why a person would keep GPI until age 99 because the insurance charges will be ridiculous at old age.
I previously wrote an article showing you some practical strategies to avoid investment-linked policy lapse.
Supplementary Benefits (Riders)
Besides the basic 2D coverage (Death & TPD), what make the plan appealing is the flexibility to add in, modify, change, reduce, increase many supplementary benefits that is only available if you have a basic plan of GPI. There are more than 10 riders available, but I will just elaborate the most popular riders here.
- Critical Illness Benefit Rider – covers the event of 36 dread diseases. The benefit amount shall not be more than the basic sum assured
- Great Income Rider – In the event of the Life Assured becoming Totally and Permanently Disabled (TPD) as defined in the policy before the policy anniversary on which his age next birthday is 65 years, the Company shall pay 10% of the Sum Assured annually commencing from the next policy anniversary up to the policy anniversary age 65 next birthday.
- Health Protector – Hospitalization and surgical benefit. 4 packages available which provide different room & board limits and overall lifetime limit.
- Premier Comprehensive Accidental Benefit – This Supplementary Benefit provides coverage in the event of death or injury caused solely and directly from accident. The coverage is extended to accidents arising from assault, murder, riot, hijacking, kidnapping and civil commotion.
- Waiver Premium Plus – This rider waives all annual premiums for Investment-Linked policies upon Total and
Permanent Disability or occurrence of any 36 critical illnesses whichever is earlier. Also known as investment replacement, this is a great feature that beats unit trust.
Figure 1: Premium allocation schedule
The premium paid is subjected to allocation. For every premium paid, the money goes into two portions:
- allocated premium
- unallocated premium
This section shows the ratio of premiums that is used for investments (to buy units). The schedule of allocation is as following:
Year 1-2 – 42.75%
Year 3-4 – 76.00%
Year 5-6 – 85.50%
Year 7 onwards – 99.75%
This portion of premium will be used to purchase investment fund unit. Insurance charges and policy fees will be deducted by selling off unit fund.
This section of the premium is used to pay insurer’s expenses including the commissions payable to the agency force / other intermediaries in the investment-linked funds.
Figure 2: Sample of GPI illustration
Great Eastern provides its agency force with a regularly updated software – GELSIS to generate the insurance plan illustration. GPI illustration is over 20 pages. If you want to look at a sample, please contact me and provide details such as date of birth, premium budget etc.
For the insightful analysis of the quotation, you can refer my previous post that show how to calculate the insurance charges and cash value.
Protection, Cash Value & Premium Chart
Figure 3: Death benefit, Cash Value and Total Premium paid chart
Red line – Death Benefit increases parallel with cash value (green line)
Blue line – Total premium paid
Green line – projected total investment value (TIV)
In Figure 3, the green line will never hit the blue line, indicating that the TIV is always less than the premium paid. The graph may varies in different circumstances depends on the below factors:
- investment fund performance
- changes of insurance charges – fees increase according to age
- alteration of riders and basic sum assured will alter the insurance charges as well
- investment top up
If the red line (protection) is lowered, it is very easy to get the green line (cash value) surpass blue line (premium paid) around 20 years.
Transparency: Quarterly Statement
GPI is a very transparent plan. Great Eastern sends four statements to policyholders in one calendar year. If you are a GPI owner, refer my tutorial on how to read the investment-linked policy financial statement.
Tomorrow, I will show another great bestselling products from Great Eastern Life Assurance. Stay tuned!
Rider: a life insurance rider is insurance that:
- is attached to a policy of life insurance
- adds specified events and contingencies to those insured under the policy
- is subject to the terms and conditions of the policy.
Regular Premium: insurance premium is payable periodically (monthly, quarterly, half-yearly & yearly) for a period of time , normally until the policy matures.
Investment-linked plan (ILP): insurance products that give protection features with cash value ties to investment fund performance calculated in unit value.
TIV (total investment value): equals to the cash value policyholders get when they surrender their investment-linked policies. It is calculated using this formula – TIV = No.unit x unit price