AIA Retirement Saver (IV) offers a lot of possibilities if you are planning for a good life during your retirement.
It’s an annuity policy that enables you to receive guaranteed and non-guaranteed income during your retirement.
It’s also packed with multiple features, such as flexible premium payment options and optional riders.
Here, we comprehensively analyse AIA Retirement Saver (IV), including features, benefits, and everything else you need to know.
Read on.
My Review of the AIA Retirement Saver (IV)
The AIA Retirement Saver (IV) is designed to provide individuals with a structured and secure financial foundation for their retirement years.
This policy comes with various features and options catering to different retirement planning needs. Below, I’ve outlined the pros and cons of this policy to help you make an informed decision.
Pros
1. Flexible Premium Payment Options: One of the significant advantages of the AIA Retirement Saver (IV) is its flexible premium payment options. You can choose between making a single lump-sum payment or spreading your payments over 5 or 10 years. This flexibility lets you plan your finances according to your current financial situation and future income expectations.
2. Guaranteed and Non-Guaranteed Income: The policy guarantees a return of capital upon reaching your selected retirement age, providing a safety net for your investment. Additionally, it offers the potential for non-guaranteed dividends or bonuses, which can increase your retirement income, potentially even adjusting for inflation over time. This blend of guaranteed and non-guaranteed income can particularly appeal to those seeking security and growth in their retirement savings.
3. No Medical Underwriting for Base Plan: The policy can be purchased without the need for a medical check-up, making it accessible to a wider range of individuals, including those who might be concerned about their health status impacting their eligibility for retirement savings plans.
4. Optional Add-On Riders for Enhanced Protection: The availability of optional riders, such as the Critical Protector Waiver of Premium and Early Critical Protector Waiver of Premium, provides additional protection. These riders ensure that your policy remains in force even if you face significant health challenges, without the burden of continuing premium payments during difficult times.
Cons
1. Limited Insurance Protection: While the AIA Retirement Saver (IV) offers death coverage, it lacks comprehensive insurance protection against Total Permanent Disability, Terminal Illness, and Critical Illnesses directly within the base plan. This limitation means that individuals seeking extensive insurance coverage as part of their retirement planning might find the policy lacking in this aspect.
2. Potential for Lower Early Surrender Value: The policy may not have a high surrender value in the early years, which could be a drawback for individuals needing to access their funds prematurely. This characteristic makes it less suitable for those who are not confident in their ability to commit to the long-term nature of the policy.
3. Dependency on Non-Guaranteed Benefits for Higher Returns: While the possibility of non-guaranteed dividends or bonuses can enhance your retirement income, it’s important to remember that these are not guaranteed and depend on the insurer’s investment performance. This uncertainty might not sit well with individuals looking for a fully predictable retirement income stream.
The AIA Retirement Saver (IV) offers a robust framework for individuals planning for retirement, with flexible premium payments and a mix of guaranteed and potential non-guaranteed income.
However, its suitability depends on your individual financial goals, your need for insurance coverage, and your comfort level with the balance between guaranteed returns and the potential for higher but non-guaranteed bonuses.
Considering your financial situation and retirement objectives, it’s essential to weigh these pros and cons carefully.
We recommend getting a second opinion on whether the AIA Retirement Saver (IV) is the best retirement plan for you or if better alternatives are available.
This is important as you’re about to make premium payments for up to 10 years and will rely on this policy for your retirement funds.
The last thing you want is a policy that doesn’t meet your needs.
If you’re interested in a second opinion, we partner with unbiased financial advisors who can help you compare and find annuities that might suit you better.
Click here for a free second opinion.
Let’s now explore what the AIA Retirement Saver (IV) offers.
Criteria
Because AIA Retirement Saver (IV) helps you in meeting your retirement goals, you can choose your preferred monthly income as well as the age you want to receive the money (starting at 50).
As well, the plan offers this monthly income to you over 15 or 20 years.
Features
AIA Retirement Saver IV has numerous features that you can explore when looking for an annuity plan to cover your needs during retirement.
Premium Payment Options
There are 2 options through which you can make premiums either single premium payment or regular payments.
Therefore, you can choose to pay a single lump-sum payment or spread the payments over 5 or 10 years whichever option best suits you.
In addition, premiums are payable up to 5 years before the accumulation period ends.
Likewise, SRS payments are available which means you can pay with your SRS accounts.
Like most other policies, regular premiums can be paid monthly, quarterly, biannually, or yearly.
Payout Options
With this plan, you can choose to receive your monthly retirement payout over 15 or 20 years.
In addition, you can choose when to receive your retirement income either at ages; 50, 55, 60, 65, or 70.
After you retire you can receive your payouts as a single amount or monthly income.
Any debts you owe the policy will be deducted before the payouts commence.
Capital Guaranteed
One unique thing about AIA Retirement Saver (IV) is that it offers a capital guarantee such that you’ll get back your money when you attain your selected retirement plan.
Non-Guaranteed Dividends Or Bonuses
The plan cushions your savings against external market forces such as inflation thereby enhancing your monthly income in the form of dividends or bonuses which will be paid during your preferred retirement
Thus, there’s a possibility of your retirement income increasing by 5% every year.
However, with all non-guaranteed features, it’s best to take this with a pinch of salt.
Maturity Bonus
With AIA Retirement Saver (IV), you can get a one-time lump sum payment when you make a claim, during surrender, or maturity.
The expected rate of return is 4.17% per year upon maturity.
Premium Pass Option
You can enjoy 12 months of interest-free duration with the Premium Pass Option that lets you defer premiums in case of disruptions such as job losses.
Notably, this option is only available if the job loss is involuntary and all your premium payments have been regular for three years.
No Medical Underwriting
You can purchase AIA Retirement Saver (IV) regardless of your health condition since a medical check-up is not mandatory unless you’re taking up additional riders.
Protection
The AIA Retirement Saver (IV) guarantees income in your golden years. The table below summarises the benefits and what you can expect from this policy.
Death
Like with other annuities, AIA Retirement Saver (IV) offers coverage in case of death.
If death occurs, the policy automatically terminates.
However, it doesn’t offer coverage against Total and Permanent Disability.
Optional Add-On Riders
You can enhance your plan by choosing additional riders such as;
Critical Protector Waiver of Premium III
In this regard, the premiums are waived if you get diagnosed with up to 72 major stage critical illnesses such as heart disease or cancer.
Therefore you can focus on getting well instead of stressing about premium payments.
Early Critical Protector Waiver of Premium (II)
With this rider, the future premiums are taken care of if you are diagnosed with up to 149 multi-stage CIs.
AIA Retirement Saver (IV) Key Highlights
AIA Retirement Saver (IV) is suitable for you if you are looking for a policy that;
- Offers medium to long-term wealth growth.
- Provides guaranteed retirement payouts throughout a certain period.
- Secures a monthly retirement income starting from the preferred date of your retirement for over 15 years.
- Offers a medium to long-term savings period vai the 5 or 10 years premium term.
- Offers guaranteed cash benefits during retirement.
- If you don’t require access to your savings before retirement.
However, it may not be a suitable option for you in the following circumstances;
- Does not offer insurance protection and coverage.
- Does not offer income payouts in case of disability.
- Doesn’t have a high surrender value in the early years
Illustration
To understand how AIA Retirement Saver(IV) works, here are some examples to illustrate.
Assuming two individuals Paul and Jackson decide to take up AIA Retirement Saver (IV) policy. Paul is 45 years old whereas Jackson is 55 years.
Both gentlemen expect to receive a retirement payout of S$1,000 per month upon reaching 65 years.
Example 1 Paul’s Case
Paul would like to start receiving his retirement payouts for twenty years. Also, he would like regular premium payments spread over a 20 years period.
In this regard, the total premiums paid will be S$207,150 and he will enjoy a 100% Capital Guarantee when he reaches 65 years.
At age 50, the unexpected happens and Paul is retrenched. In this instance, he chooses the Premium Pass Option and subsequently defers the premium payments for 12 months.
Thus, his plan will remain in force despite the disruption.
At 65 years, Paul starts receiving his monthly retirement income. By 87 years, he will have received a total of;
| Guaranteed retirement income for 20 years (1000x12x20) | S$240,000 |
| Additional retirement income or expected dividends (Assuming a total yield at maturity of 3.68%p.a) | S$137,810 |
| Expected lump sum terminal dividend (bonus) at age 85 | S$149,360 |
Example 2 – Jackson’s case
Jackson would like to receive his monthly retirement income spread out across 15 years. He also chooses to pay a single premium as opposed to regular premiums.
The total premium paid as a single payment is S$158,710. Just like Paul’s case, Jackson enjoys a 100% capital guarantee at 65.
At 65 years, Jackson will start receiving his monthly retirement income as shown in the table below.
| Guaranteed retirement income for 15 years (1000x12x15) | S$180,000 |
| Additional retirement income or expected dividends ( Assuming a total yield at maturity of 3.52%p.a) | S$61,630 |
| Expected lump sum terminal dividend(bonus) at age 80 | S$63,140 |
Notably, the calculations are based on the following assumptions;
- An illustrated rate of return of 4.25% per annum.
AIA Retirement Saver (IV) Summary
| Cash and Cash Withdrawal Benefits | |
| Cash value | Available |
| Cash withdrawal benefits | Available |
| Health and Insurance Coverage | |
| Death Coverage | Available |
| Total Permanent Disability | Not available |
| Terminal Illness | Not available |
| Critical Illness | Not available |
| Early Critical Illness | Not available |
| Health and Insurance Coverage Multiplier | |
| Death | Not available |
| Total Permanent Disability | Not available |
| Terminal Illness | Not available |
| Critical Illness | Not available |
| Early Critical Illness | Not available |
| Optional Add-on Riders | |
| Early Critical Protector Waiver of Premium | Available |
| Critical Protector Waiver of Premium | Available |
| Other Benefits | |
| Premium Payment Deferment | Available |
| Non-guaranteed bonuses | Available |
