TM Legacy Plus (revised)

Tokio Marine Life Insurance revised its highly popular TM Legacy Plus from 14 October 2011. It's a whole life insurance plan with a Minimum Benefit payable by entry age. Beyond a prescribed age, the payout will be only the basic sum assured together with attaching bonuses (reversionary and terminal).

Some quick observations-
1. The Minimum Death Benefit is adjusted upwards across all age groups.
    Entry Age (nx b'day)            MDB multiplier
            1-31                               2.50
            32-34                             2.40
            35-39                             2.30
            40-44                             2.00
            45-49                             1.75
            50 and above                  1.45

2. Instead of up to age 65, the Minimum Death Benefit is extended to age 70. This applies to the Critical Illness accelerated rider as well.

3. Guaranteed cash value is somewhat reduced as compared to its version prior 14 Oct 2011.

4. More emphasis is now placed on the Total Cash Value, where the Terminal Bonus rates have doubled for policy incepted 25 years and above.

5. Removal of exclusion clause for Critical Illness rider where Tokio Marine will not pay CI claim for
"any congenital or inherited disorder which first manifested itself before the Life Assured’s 7th birthday".

6. Premiums are revised upwards (average 20-25% higher than previous version).

Comments-
Though it is clear the plan is now revised to focus on the protection element (by the MDB), I still feel for the previous version. Probably a distinction has to be made between the standard no-frills TM Legacy plan and this Legacy Plus; hence, the impact on pricing as well.

Nonetheless, the removal of the above specific CI exclusion clause is a welcome change. In cases of autism (where symptoms typcially occur between ages 2-3), a policy bought at childbirth on the old policy wording would be subject to greater scrutiny upon claim. Now, no longer an issue with the removal of this contentious clause.

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Aviva MyLifeChoice

Aviva MyLifeChoice was launched in September 2011.
It's a new participating Whole Life Plan with flexibility to add on modules for TPD and Critical Illness.

It allows policyholders to benefit from:

1. An option to increase term life coverage at key life events (e.g. marriage, birth of new child) without evidence of good health.
2. Coverage up to 275% of the Basic Sum Assured.
3. Guaranteed higher lump sum payout upon claim (due to Minimum Protection Value).
4. Supplemental retirement fund by lump sum withdrawal from age of 65.
5. Optional Critical Illness and Total and Permanent Disability rider for coverage till age 99 and 70 next birthday, respectively.

The Minimum Protection Value is dependent on entry age as follows:
Entry Age (Age NB)             MPV Factor
 1- 12                                    275%
 13- 24                                  250%
 25- 29                                  220%
 30- 34                                  200%
 35- 39                                  170%
 40- 60                                  150%

However, this MPV payout is only applicable for a period of 20 years from policy inception or up to age 65 of the Insured whichever is earlier. If TPD and/or CI riders are included, the MPV applies to them as well.

On point 4 with regard to supplementing retirement income, this is promoted via the Advance Cash Withdrawal option from age 65 onwards. However, I find that if I do exercise the option to receive cash, the plan converts into an extended term insurance which covers me at the basic sum assured to age 99 with no participation in further bonuses. Instead, I'd rather do a partial withdrawal of bonuses only, and still allow the plan to participate in future bonus declarations.
 
Another observation is about the cash values. On the guaranteed cash values, MyLifeChoice does hold up to plans like NTUC Vivolife and TM Legacy in the later policy years (e.g. from year 20 onwards). However, in the early years of the policy from year 3 onwards, the guaranteed cash values of MyLifeChoice is rather low. Terminal bonus rates are decent which makes the total projected values attractive. The question is whether Aviva can deliver in future.
 
To round up, premium rates for this plan are competitive with other hot favourites from NTUC Income and Tokio Marine Life Insurance. Competition is heating up (and I hear Tokio Marine Life is spicing up its TM Legacy Plus pretty soon).

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Early Payout Critical Illness - NTUC VIVOCARE

NTUC Income has launched VIVOCARE since 19 Aug 2011.

It is a plan targeted at the whole spectrum of Critical Illnesses; from EARLY stage to Intermediate and finally, Advanced stage. This means early stage CANCER or carcinoma in situ will be covered, in addition to early stage definitions of other Critical Illnesses.

Key Features

1.   Early Stage Critical Illness– 50% payout (capped @75K) +bonus

2.   Intermediate Stage CI– up to 100% payout (capped @150K) +bonus

3.   Advanced Stage CI – payout of any remaining sum assured + bonus

4.    Special Dread Disease benefit

a.        20% payout, capped at $30,000 for following

                              i.            Angioplasty (heart stent/balloon)

                             ii.            Severe Rheumatoid Arthritis

                            iii.            Diabetic Complications

                            iv.            Severe Osteoporosis

b.      Claim of Special benefit does NOT reduce Sum Assured.

5.   Death Benefit – 300% of basic sum assured less off any payout for early/intermediate CI claim (before age 65)

6.   Premium term: 20/25 years, or up to age 64/84.

Benefits payable are capped per Insured, regardless of number of policies. This means that a policyholder cannot increase the payout of early stage claim by aggregating sum assured by multiple policies.

I like the idea it’s a plan that allows for continuous coverage for as long as possible, yet allows for claim in event of early detection of critical illness before the disease gets full-blown and out of control. For instance, consider the claim definition for early and advanced stages of cancer (see extract below).

Carcinoma in situ of Specified Organs

Carcinoma in situ of the following sites: Breast, uterus, ovary, fallopian tube, vulva, vagina, cervix uteri, colon, rectum, penis, testis, lung, liver, stomach, nasopharynx or bladder.

Carcinoma in situ means the focal autonomous new growth of carcinomatous cells confined to the cells in which it originated and has NOT yet resulted in the invasion and/or destruction of surrounding tissues. ‘Invasion’ means an infiltration and/or active destruction of normal tissue beyond the basement membrane. The diagnosis of the Carcinoma in situ must always be supported by a histopathological report. Furthermore, the diagnosis of Carcinoma in situ must always be positively diagnosed upon the basis of a microscopic examination of the fixed tissue, supported by a biopsy result.

Major Cancers (as per standard LIA definition)

A malignant tumour characterised by the uncontrolled growth and spread of malignant cells with invasion and destruction of normal tissue. This diagnosis must be supported by histological evidence of malignancy and confirmed by an oncologist or pathologist.

Compared to NTUC Vivolife, I believe this plan provides much more thorough and comprehensive Critical Illness coverage. This is its focus. As such, the cash value element (relative to Vivolife) isn’t the main attraction. Also, as the claim incidence is likely higher, the premiums will reflect this; hence, in general, expect about 15-25% increase (for non-smokers).

Today, there are many plans in the market which target early stage Critical Illnesses. But overall, from scope of cover to length of cover and weighing premiums versus payout, I believe NTUC has done well with this plan. The wait is finally over.

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