Pru launches 3 pay 10 Endowment plan, likely for UOB

Pru Singapore launched a new Limited Pay Endowment plan. Its a 3 pay 10 plan, meaning it has a 3-year premium payment term and a 10-year maturity period.

Death benefit for PruSave Privilege is the lower of:

• 105% of the total premiums paid that are added PRUsave privilege at the time of death; or
• the Face Value

Policyholder would also receive a one-time cash reward on the fourth Policy Anniversary (1.25% of the total premiums paid to Premium Accelerator). (Plan details: PRUsave privilege accelerator)

This product doesn't have to go through medical underwriting unless you attach riders / it is guaranteed issuance.

Author's comment: "Pru has always stayed away from launching this plan before. They have actually inherited this very exact product from UOB Life when it was acquired as part of the bancassurance deal with UOB Bank in Jan 2010. 

The 3 pay 10 was the bestseller at the UOB Life and was the bulk of the business that they sold through the UOB Bank. The only problem was that it was actually a loss making product. So while UOB Bank was very keen to continue selling the plan after the deal was signed with Pru, it was deemed not viable at that point for Pru to take over manufacturing that plan. 

The surprising part is that Pru has actually ventured down this path again, no doubt under the pressure from UOB and Pru shareholders who seek management's justification for the exorbitant price that was paid for the UOB partnership.

As a customer I would be very careful when considering this plan. You will end up paying for the death cover as well as limit your returns to those of the PAR fund, which is extremely conservative. Depending on your risk profile you might want to understand if investing in blue chip bonds and stocks together with buying a term plan could be a better alternative. 

The biggest beneficiary for this plan would obviously be not the customer, nor Pru, but the Bank."