The Manulife ReadyBuilder (II) is a flexible endowment plan designed for long-term financial goals. It offers capital guarantees at maturity, flexible premium terms, and potential growth through participating funds. Ideal for legacy planning but may have limited early access to funds.
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The Manulife ReadyBuilder (II) offers growth potential through its participating fund, with both guaranteed and non-guaranteed returns based on market performance.
This policy combines capital guarantees, flexible premium terms, withdrawal options, and comprehensive coverage, catering to a range of long-term financial goals.
The plan provides flexible premium payment options and the ability to access cash value through withdrawals and partial surrenders, enhancing its adaptability to changing financial needs.
- Capital is guaranteed at maturity, providing financial security for long-term commitments.
- The plan includes flexible premium payment terms, ranging from single premium to regular payments over 5, 10, 15, or 20 years, along with withdrawal options for accessing cash value.
- Manulife's participating funds are one of the best performing in the market.
- Early access to funds may result in reduced policy value and potential penalties before reaching the breakeven point.
- Managing withdrawals and maintaining benefits requires careful planning to avoid long-term value reduction.
VERDICT:
The Manulife ReadyBuilder (II) is a robust endowment plan designed to support long-term financial goals through capital guarantees at maturity and flexible features.
Its growth potential, supported by participating fund performance, offers both guaranteed and non-guaranteed returns.
However, the plan requires careful management of early withdrawals to maintain its overall value.
While the policy’s flexibility in premium payments and access to cash value makes it adaptable, the dependency on market conditions for non-guaranteed returns could be a downside for some investors.
Ideal for those looking to build a financial legacy, the Manulife ReadyBuilder (II) balances security with growth potential, but may not suit those seeking immediate liquidity or shorter investment horizons.
What we like about the Manulife ReadyBuilder (II)
Capital Guarantees
Capital guarantees are a crucial feature of the Manulife ReadyBuilder (II), and here’s why I like them:
Peace of Mind: The capital guarantee at the end of the policy term ensures that your principal investment is protected. This is particularly reassuring in uncertain economic times when market volatility can erode investment value. With a capital guarantee, you know that your hard-earned money is safeguarded.
Breakeven Point: The policy’s guaranteed breakeven point after 15 years means you’re assured of receiving at least your total premiums paid if you hold the policy until then. This feature makes it a solid choice for risk-averse investors who want assurance that their capital will be preserved over time.
Long-term Security: Knowing that your capital is guaranteed encourages long-term investment discipline, which is essential for wealth accumulation. It allows you to commit to your financial goals without worrying about losing your initial investment.
Guaranteed & Non-Guaranteed Returns
The combination of guaranteed and non-guaranteed returns in the Manulife ReadyBuilder (II) policy is particularly appealing for several reasons:
Balanced Growth: Guaranteed returns provide a steady, predictable component to your investment, ensuring that you have a baseline return regardless of market conditions. This is essential for financial planning and forecasting.
Potential Upside: The non-guaranteed returns, which include reversionary and surrender bonuses, offer the potential for higher gains. These returns are linked to the performance of Manulife’s participating fund, giving you the opportunity to benefit from favourable market conditions.
Illustrated Returns: Based on an illustrated investment rate of return of 4.25% per annum, the policy demonstrates the potential for substantial growth over time. This dual approach balances safety with the potential for higher returns, making it an attractive option for both conservative and growth-oriented investors.
Premium Payment Terms
The premium payment terms of the Manulife ReadyBuilder (II) offer significant flexibility, which is one of its standout features:
Flexible Options: You can choose from various premium payment terms, including a single premium or regular payments over 5, 10, 15, or 20 years. This flexibility allows you to tailor the plan according to your financial situation and future goals.
Level Premiums: The premiums are level and guaranteed, meaning you pay the same amount throughout the payment term. This predictability helps with budgeting and financial planning, ensuring there are no unexpected increases in premium costs.
Adaptable to Life Stages: The range of payment terms makes this policy adaptable to different life stages and financial goals, whether you’re saving for retirement, planning for your child’s education, or looking to secure a legacy.
Payout Options
The payout options of the Manulife ReadyBuilder (II) are designed to provide flexibility and financial control, making them a particularly attractive feature of the policy:
Access to Cash Value: One of the standout features is the ability to access the policy’s cash value through withdrawals. This is beneficial for funding significant life goals, such as buying a home, starting a business, or financing a child’s education.
Withdrawal of Bonuses: You have the option to fully or partially withdraw any accumulated reversionary or surrender bonuses. This flexibility means you can access additional funds when needed, without having to surrender the entire policy.
Partial or Full Surrender: For those who need a substantial cash sum, the policy allows for full or partial surrender. While a full surrender provides access to the entire cash value, partial surrenders enable you to withdraw specific amounts, with a minimum of $500, without terminating the policy entirely.
Maturity Benefits: At maturity, the policy offers a payout that includes the guaranteed surrender value, any accumulated reversionary bonus, and non-guaranteed surrender bonuses. This feature ensures a financial reward for policyholders who maintain their policy until maturity.
Premium Holidays/Freezes
The premium holidays and freeze options provide significant advantages, especially during financial uncertainties:
Temporary Relief: The Premium Freeze Option allows you to temporarily defer premium payments for one year while keeping the policy active. This can be a lifesaver during financial difficulties, allowing you to manage other financial priorities without losing coverage.
Flexible Activation: You can exercise the premium freeze option multiple times, depending on your premium payment term, which provides flexibility and adaptability to changing financial circumstances. Specifically, policies with terms longer than five years can utilize this option twice.
Policy Continuation: Even during the freeze period, the policy remains active, maintaining its benefits and protection features. This ensures that you and your beneficiaries continue to receive coverage without interruption.
Extensions on Benefits: The premium payment term and the policy’s maturity date are extended by one year when you use the freeze option, which helps in balancing the cash flow without sacrificing long-term benefits.
Retrenchment Benefit
The retrenchment benefit of the Manulife ReadyBuilder (II) provides a crucial safety net during uncertain employment situations:
Financial Cushion: If you face retrenchment, this benefit offers a lump sum equal to 50% of the total annual mode premium. This financial cushion can be a vital source of support during the period of unemployment, helping to cover essential expenses and ease financial strain.
Eligibility and Flexibility: The benefit is available if you remain unemployed for a minimum of 30 consecutive days following retrenchment. This eligibility requirement ensures that the benefit is accessible to those who genuinely need it, offering peace of mind during a challenging time.
One-Time Benefit: While this is a one-time benefit, it is structured to provide immediate relief when needed most. Knowing that such a safeguard exists can make a significant difference in financial planning and stress management during employment transitions.
Coverage Period: The retrenchment benefit is applicable during the premium payment term or until your 65th birthday, whichever is earlier. This coverage period ensures protection during the most active years of employment.
Change of Life Insured Option
The change of life insured option offers flexibility for legacy planning and adapting the policy to changing life circumstances:
Legacy Planning: This feature allows you to change the life insured under the policy, making it a valuable tool for legacy planning. You can transfer the policy to a child or loved one, ensuring that the accumulated wealth continues to benefit future generations.
Flexibility: The ability to change the life insured up to two times during the policy term (for individual policyholders) provides significant flexibility. This is particularly useful if family circumstances change, such as when children grow up or if there’s a need to support another family member.
Continuity of Coverage: By transferring the policy to a new life insured, the policy’s benefits, including coverage and cash value growth, continue seamlessly. This ensures that the policy remains relevant and beneficial even as life situations evolve.
Requirements: There must be a legitimate financial or familial relationship with the new life insured, ensuring that the policy remains a meaningful and legally sound financial instrument.
What we think the Manulife ReadyBuilder (II) could do better
Capital Guarantees
While capital guarantees provide some level of security, there are certain limitations and drawbacks associated with them:
Limited Flexibility: The capital guarantee only applies at maturity, which means that policyholders need to wait until the policy term ends to benefit from this feature. If you need to access your funds earlier, you may not receive the full amount of your premiums paid.
Opportunity Cost: Waiting for the full policy term to realize capital guarantees could result in missed investment opportunities elsewhere. In dynamic financial markets, being locked into a long-term plan without early access to guaranteed capital might not be ideal for everyone.
Delayed Breakeven: The breakeven point occurs after 15 policy years, which might be too long for some investors who are seeking quicker returns or capital recovery. This delay can be a significant drawback for those with shorter investment horizons or changing financial needs.
Payout Options
The payout options, while flexible, also have aspects that could be seen as disadvantages:
Reduction in Policy Value: While withdrawals and partial surrenders provide access to funds, they reduce the total death benefit and the future cash value of the policy. This reduction means that accessing funds early can have long-term consequences on the overall value of the policy.
Potential Penalties: Early surrenders can lead to penalties or receiving less than the total premiums paid, especially if done before the breakeven point. This risk makes it crucial for policyholders to carefully consider the timing and amount of any withdrawals.
Minimum Withdrawal Amounts: The policy sets a minimum amount for partial withdrawals ($500), which might not align with the financial needs of all policyholders, especially those seeking smaller amounts of liquidity.
Better alternatives to the Manulife ReadyBuilder (II)
NTUC Income Gro Saver Flex Pro
The NTUC Income Gro Saver Flex Pro stands out as an excellent alternative due to its flexibility and performance:
High Flexibility: The plan offers a wide range of premium payment and policy term options, making it adaptable to various financial goals and life stages. Whether you’re planning for retirement or looking to supplement your income, this plan can be customized to fit your needs.
Competitive Returns: NTUC Income’s participating funds are among the top performers in the market, second to Manulife’s, providing policyholders with high potential returns. This performance is reflected in both the guaranteed and non-guaranteed returns, making it an attractive option for those seeking both security and growth.
Strong Protection Features: The plan includes comprehensive coverage, such as death and terminal illness benefits, ensuring that you and your loved ones are financially secure in unforeseen circumstances. This added layer of protection enhances its value as a holistic financial product.
Singlife Choice Saver
Singlife Choice Saver is another excellent alternative, known for its high guaranteed returns and flexibility:
Highest Guaranteed Returns: This plan offers some of the highest guaranteed returns in the market, providing a level of certainty and security that is highly valued by investors. The assurance of getting a substantial return at maturity makes it an attractive choice for risk-averse individuals.
Flexibility in Policy Terms: The plan provides a range of policy terms, from 10 to 25 years, or up to 99 years old. This flexibility allows policyholders to align the plan with their specific financial goals, whether short-term or long-term, ensuring that the policy matures at a convenient time.
Capital Protection: Capital protection upon maturity ensures that the principal investment is safeguarded, providing peace of mind to policyholders. This feature is crucial for those who want to ensure their investment remains intact despite market fluctuations.
Liquidity Options: The Choice Saver allows for partial withdrawals under certain conditions, offering liquidity when unexpected needs arise. This feature provides financial flexibility without compromising the overall benefits of the plan.
AIA Smart Wealth Builder Series
The AIA Smart Wealth Builder Series offers unique features that make it a strong contender as an alternative:
Long Policy Terms for Legacy Planning: With policy terms extending up to 125 years, this plan is ideal for those interested in legacy planning. It allows for wealth accumulation over a long period, ensuring that the financial legacy can benefit future generations.
Flexible Premium Options: The series provides both single premium and regular payment options, accommodating different financial capacities and preferences. This flexibility makes it easier for policyholders to manage their financial commitments according to their cash flow.
Capital Protection Features: The plan includes strong capital protection mechanisms, ensuring that the initial investment is preserved. This is particularly appealing to those who prioritize security and wish to protect their financial investments over the long term.
Comprehensive Coverage: The AIA Smart Wealth Builder Series offers extensive protection benefits, including death, total permanent disability, and terminal illness coverage. This comprehensive coverage ensures that policyholders are well-protected against a wide range of risks.
Let Us Compare Policies For You
When considering endowment plans, it’s essential to evaluate the overall flexibility offered by the features.
Since these plans are long-term commitments, you’ll want to look at the accumulation period and payout options available.
It’s important to determine whether your capital is guaranteed and understand the growth potential of the participating funds, keeping in mind both the guaranteed and non-guaranteed returns.
Remember, a policy that suits one specific goal might not be appropriate for a different set of objectives.
This is why it’s crucial to understand what you’re purchasing on a deep level.
Our partnered financial advisors are highly trained and have extensive experience in guiding clients through these decisions, ensuring you make informed choices that align with your goals.
We offer a free and non-obligatory comparison session where we help you compare policies, taking into account all these factors and their suitability for your current situation and future aspirations.
We’ll also help you obtain quotes to compare, ensuring you find the plan that best meets your needs.
Let us assist you in navigating the complexities of endowment plans, so you can make the best decision for your financial future.