Manuinvest Duo Analysis: Is this ILP better than standalone early critical illness term

Manuinvest Duo is in it’s core an ILP Plan. We may have heard bad rep about ILP products but here it is, ILP is still around, and times has change and so has the products. In this article, we have done some research of our own and we found out that Manuinvest Duo with Early CI rider can be a very affordable early critical illness plan by itself, even potentially cheaper than a stand-alone term that focuses on Early CI! Before reading on, our disclaimer is as follow:

This is not a recommendation, Moneyline.SG is not an Exempt Financial Adviser and act only as an information portal, please seek advice from a licensed financial advisor or leave your contact details below for a proper fact find by a licensed practitioner before making any decision. All information provided are public and can be found directly on the providers website or via any financial representatives that represents the product provider.

Here is a quick description of the plan:

ManuInvest DUO ILP

ManuInvest Duo aims to provide policyholders with adequate life insurance coverage as well as potential long term high return on their premiums paid. It is an Investment Linked Policy that invest the premiums into funds within the spectrum of funds availed by Manulife itself.

Policyholders (PH) can choose from the following Minimum Investment Period of 10, 15 or 20 years with a minimum annual premium of $3,600, $2,400 or $1,200 respectively. Thereafter, PH can have the option to continue with their investments or to stop premium payment altogether while letting their policy continue its accumulation and to sustain their coverage.

Policyholders will also receive welcome and loyalty bonuses with escalating amount depending on the Minimum investment period and the sum assured they choose. Like every ILP, Manuinvest DUO bank on two complimentary features: Investment and protection.

Manuinvest DUO As an Investment

ManuInvest Duo basic plan will invest 100% of the premiums into a wide array of investment funds catered to different policyholder risk appetite. Policyholders is required to commit their investment for 6 years before they can start to make any withdrawals without significant charges and penalties. From the 7^th policy year, if there is a need to access the policy for some liquidity, Manulife will charge a $50 transaction fee for every partial withdrawal (up to 20% of the basic premium and top up premium paid in the last policy year)

Policyholders can also receive a regular stream of income when they invest in dividend-paying funds subjected to the distribution rate and frequency of the chosen ILP sub-fund(s).

ManuInvest DUO As a Protection

As a protection plan, policyholders can optimise their protection amount to cover up to 100x of their first-year premium for death, terminal illness, and total and permanent disability.

The plan also allows policy holders to add in riders to enhance their coverage with critical illness and early critical illness.

This is where it gets interesting.

We have done some comparison with specific permutations focusing on early-stage critical illness between Manulife Ready Complete Care till 75 & 100 (Single Payout Early CI Term Plan) and Manu Invest Duo with Early Critical Illness Rider 20 years MIP and the below is what we got.

From its face value of, it can be hard for a layman to understand why we find this fascinating but hold our beer as we explain its appeal and do a case study.

First, we must understand that Manulife ReadyCompleteCare (RCC) regardless of the policy term (till age 75/99) is a plain vanilla Early Critical Illness term insurance plan, it has also one of the most competitively priced premium across the industry for the same level of coverage and policy term. However, as a plan, it does not accumulate cash value, this means if policy holders were to terminate or stop paying, the plan will terminate, and the PH will lose all its coverage. The ManuInvest Duo on the other hand invests the premium paid as shown above and accumulates policy value base on the investment performance of the underlying funds minus whatever charges stated in its product summary.

Base on the table, the premium for Manulife RCC with policy term till age 75 cost slightly cheaper than the Manuinvest Duo with Minimum Investment Period of 20 years and the Manulife RCC with policy term till age 99 cost slightly more. Regardless, the most important aspect to take note is that the Manulife RCC requires the PH to pay until age 75/99 respectively and will terminate whenever the PH stops paying. The Manuinvest DUO with MIP 20 on the other hand only requires the PH to pay for 20 years and PH can stop paying the premium thereafter without penalty or causing the plan to terminate if there is sufficient policy value to maintain the coverage.

Now, let’s assume that a 35-year-old male customer who is considering getting insured for 200,000 payout upon early stage critical illness diagnosis is being proposed both ManuInvest DUO with 20 years Minimum Investment Period and the Manulife Ready CompleteCare till age 75/99. The math will look like this:

Option 1: ManuInvest Duo total Premium: $3,334 x 20 = $66,680

Option 2: Manulife Ready Complete Care till 75: $2,657.80 x 40 = $106,312

Option 3: Manulife Ready Complete Care till 99: $4,265.80 x 64 = $273,011.20

As above, if the investment return for the underlying Manuinvest Duo funds continues to cover the various policy charges and cost of insurance long after the Minimum Investment Period of 20 years for as long as the client intends to keep the policy, It seems clear without going much into the technicalities, ManuInvest Duo may make more sense compare to Manulife RCC. However, there are certain concerns if customer were to go with ManuInvest Duo e.g. the Cost of Insurance that is applicable only to ManuInvest Duo.

We further summarise the benefit and risk below:

Benefits of taking Manuinvest Duo 20 MIP over Manulife RCC 75/99

• Manuinvest Duo is limited pay to 20 years and potentially provides the 200,000 Early CI Coverage for life whereas RCC stops coverage if premium payment stops anytime.
• There is potential Cash Value remaining even if the customer decides to surrender the plan during the protection period whereas the RCC does not accumulate any cash value
• Client may exercise the feature to withdraw part of the cash value while keeping the coverage for as long as there are sufficient cash value to afford for cost of insurance deduction.
• Coverage for ManuInvest Duo also provides similar death and disability benefit whereas RCC only refunds back total premium paid if PH dies before any claim on ci has been made.
• Premiums are shown to be lower and payment term can be limited for ManuInvest Duo as compared to Manulife RCC till age 99 for the same coverage.

Risks of taking Manuinvest Duo 20 MIP over Manulife RCC 75/99

• Manuinvest Duo is an ILP, the Cost of insurance to protect 200,000 Early-Stage CI can be exponentially higher as the life assured ages with policyholders potentially being forced to top up much higher premium later if the investment return cannot cover the charges and cost of insurance.
• Negative investment performance may cause PH to make continuous premium payment plus cash value top up early in the policy years to prevent lapsation of the whole plan

Is ManuInvest Duo a right fit for your protection portfolio?

Let our partnered financial planners compare, analyse and advise you further. To get a quote for both ManuInvest Duo and Manulife RCC customized to your needs and, fill in the form below and a licensed financial planner will contact you and draft you a proposal based on your given inputs

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