Great Eastern’s GREAT Wealth Advantage 2 Review

The GREAT Wealth Advantage 2 is a regular premium investment-focused investment-linked plan (ILP) for those seeking a two-in-one solution to investments and protection, providing you with an easy and customisable way to work towards your financial goals.

This is also the GREAT Wealth Advantage’s successor, though we reviewed this a tad too late as Great Eastern has released a new version of this series – the GREAT Wealth Advantage 3.

Nevertheless, no worries; many of you may still wonder what you’ve been recommended/purchased previously, so here’s our review of the GREAT Wealth Advantage 2.

Let’s get started.

My Review of the GREAT Wealth Advantage 2

The GREAT Wealth Advantage 2 policy has some features suitable for those with different risk appetites and uncertainty in their need for future cash flow.

You are also given the flexibility to choose your premium frequency with the minimum basic regular premiums starting from as low as $200 per month.

After investing, you can also make a partial withdrawal or stop paying premiums temporarily if you have financial needs or changes in income (with potential fees, of course).

For the more urgent cases, you are also allowed to surrender your policy, albeit with an early surrender charge.

If you decide to go for the GREAT Wealth Advantage 2, you get protection without going through medical underwriting. This means you can sign up for the plan without worrying about your health status.

This policy may be more suited as a long-term investment for those with more cash flow, considering that most charges are removed only after the 10th policy year.

However, there are quite some setbacks that I must point out.

You can’t also increase your basic regular premiums after the 10th year; there are caps to how much you can top up.

This means you are less free to have more basic regular premiums invested into your chosen fund(s).

It’s weird too. What if I want to invest more money 10 years later, which I likely will when my income increases?

What should I do then?

Buy another policy…? (You shouldn’t have to, btw)

In addition, you are also given less flexibility with partial withdrawals and early surrender due to the penalties.

Compared to the previous version, there aren’t many notable improvements apart from the higher welcome bonus of 10% to 40%, compared to 5%.

The funds are also the same GreatLink funds, which come with high fees of up to 2.25% per annum and fairly reasonable returns.

If you take the best performing fund – GreatLink Lion Japan Growth – it only has a 5-year annualised return of 9.52% (as of 19 June 2023).

With its 1.5% p.a. fund management fees – the fund level returns are 8.02%.

This excludes the yearly policy fee of 2.5%, bringing your net returns to 5.52% in your first 10 years.

And this fund focuses on the Japanese market only, not giving your much diversification.

Overall, I think the GREAT Wealth Advantage 2 is a good ILP – better than other ILPs in the market. I think there are better alternatives for you.

For example, the Manulife InvestReady III has one of the lowest fees in the market, shorter investment periods, and funds that are performing well (that pays dividends too!).

The FWD Invest First Plus has the lowest fees we’ve seen and access to accredited investor funds – which lets your money grow even faster than regular retail funds (though with a bit more risk).

As such, you should always compare with other investment-linked plans.

You might have better options, especially since investments are a long-term commitment.

You should also consider getting a second opinion or talking to an unbiased financial advisor.

With our strict selection process, we partner with unbiased MAS-licensed financial advisors to help you with this.

Click here to talk to them (for free!).

Let’s now break down GREAT Wealth Advantage 2.

Criteria

• Minimum investment of $200 per month.
• Minimum investment period (MIP) of 10 years.

General Features

Premium Payment Terms

You can make premium payments monthly, quarterly, half-yearly, or annually.

Here is how much you will need to pay in premiums based on your premium frequency:

There is a minimum investment period of 10 years, and you can hold the policy indefinitely after.

Premium Allocation

There are no premium charges, so 100% of the basic regular premiums will be used to purchase fund units.

Fund Switching

You may switch the funds you’re invested in free of charge.

If you’re switching partial units, then the units in the new fund must have a value of at least S$500 and the units in the initial fund must have a value of at least S$500.

Changing Premium Apportionment Rates

Should you decide to change the allocation of your premiums to different funds, you can do so at no cost.

This is subject to Great Eastern’s approval, and once approved, your future premiums will follow the new apportionments.

Automatic Fund Rebalancing (AFR)

You can automatically rebalance your portfolio 1 month before every policy anniversary to follow your latest premium apportionment instructions.

AFR is only performed when there is a 5% or minimally 5% deviation from your premium apportionment instructions.

In the event of single premium top-ups, fund switches, and partial withdrawals, fund apportionments may be affected to a large extent, causing the AFR to be suspended.

Hence, you must submit new instructions for executing fund allocation on the next rebalancing date.

Protection

Death Benefit

If the insured passes away, the beneficiary will receive a lump sum payout equivalent to the higher of:

• 105% of the total amount paid for basic regular and single top-up premiums, less 105% of any withdrawal amounts; or
• Your account value.

Total and Permanent Disability Benefit

If the insured suffers from a total and permanent disability (TPD), the Death Benefit will be paid out in a lump sum.

The 2 forms of TPD are Presumptive TPD and Other Forms of TPD. The definition and expiry of each TPD are listed below.

The maximum payout for any form of TPD is $5,000,000.

Terminal Illness Benefit

The insured will receive the death benefit in a single lump sum payment when diagnosed with an illness that may result in their passing within the next 12 months.

Do note that a registered medical practitioner must support the diagnosis before being verified by a medical practitioner appointed by the insurer.

Key Features

Welcome Bonus

Based on your latest apportionment instructions, the Welcome Bonus will be added to your policy during your first year as extra units in your chosen fund(s).

If you had signed up before 27 April 2023, you might enjoy the Total Welcome Bonus depending on your qualifying annual premium.

However, if you had signed up after 27 April 2023, you can only enjoy the current Welcome Bonus rates.

Note that the Welcome Bonus is a percentage of each payment of the basic regular premium for the 1st policy year.

For example, if your basic regular premium is $200, paid monthly, and you purchased the policy before 27 April 2023, your Welcome Bonus would be equivalent to $200 x 12 x 15% = S$2,400 x 15% = $360.

However, if your policy goes on a premium holiday, the Welcome Bonus payments will be halted and will only continue once basic regular premium payments are resumed.

Loyalty Bonus

After holding the policy for 10 years, you are entitled to a Loyalty Bonus equal to 0.15% of the end-year value of your account, which will be paid out at the end of each year.

Based on your latest apportionment instructions, the Loyalty Bonus will also be added to your policy as extra units in your chosen fund(s).

This is provided that the basic regular premiums are paid up to date as at the Loyalty Bonus Determination Date.

Premium Holiday

After the first basic regular payment, you may go on a premium holiday and stop making further regular payments.

However, a premium holiday charge will be imposed if you choose to go on a premium holiday in the first 10 years of your policy.

I’ll go through the charges later.

During the premium holiday, any policy fees and charges will continue to be deducted from your account value.

Rest assured that the policy will remain in effect if your account value is positive.

When there is insufficient account value, any nondeductible amount will be considered a debt to Great Eastern, and your policy will be deemed lapsed.

The premium holiday will end when you resume payment of your basic regular premiums or when the policy lapses or terminates, whichever happens first.

Basic Regular Premium Variation

You can reduce your basic regular premiums after 10 years, but you are not allowed to increase your premiums.

I find this weird; why wouldn’t you want me to invest more regularly? (just take my money already!)

However, any reductions are also subject to terms and conditions imposed by Great Eastern, and the reduced premiums will begin from the next payment due date.

There are also no mentions on how much you can reduce your premiums by, so be sure to check with your financial advisor.

Single Premium Top-ups

If you want to make a one-time top-up to your policy, you can do that as long as you are up to date with your basic regular premiums and are not on a premium holiday.

The minimum top-up amount is $1,000, and the allocation of this top-up to each of your funds must be at least $200.

However, there may be a maximum top-up amount stipulated by Great Eastern from time to time.

Partial Withdrawal

At any point, you may make a partial withdrawal if the value of the remaining units in the fund is at least $500 and the minimum remaining account value is $5,000.

However, a partial withdrawal charge will be imposed if you choose to do so in the first 10 years of your policy.

More on this charge later.

Addition of Supplementary Benefits

In this policy, you are also given the option to add on benefits such as protection against critical illnesses and disabilities.

These additional benefits are paid using the units in your policy.

GREAT Wealth Advantage 2 Top 10 Performing Funds

The Great Eastern GREAT Wealth Advantage 2 invests in its own ILP sub-fund (GreatLink funds), which are unit trusts.

Here are the top 10 performing GreatLink funds:

Figures are accurate as of 19 June 2023.

Take note that the returns you see on the fund level exclude fund management fees and ILP-level fees.

I’ll cover more on this later.

GREAT Wealth Advantage 2 Fees and Charges

Policy Fee

You will be charged a monthly policy fee until the end of the 10th year, equal to 2.50% per annum of the value of your account.

This fee will be deducted from your investments in the fund(s).

Premium Holiday Charge

As mentioned above, a premium holiday will be charged if you apply for a premium holiday within the first 10 years of your policy term.

Note that annualised premium refers to the total basic regular premiums payable for that policy year.

For example, if the basic regular premium is paid monthly at $200, the annualised premium would be $200 x 12 = $2,400.

If you take up a premium holiday in your 3rd policy year, the premium holiday charge will amount to $2,400 x 75% = $1,800.

Single Premium Top-up Charge

While you won’t be charged for making basic regular premium payments, single premium top-ups are subjected to a fee of 5%, which is deducted from the top-up value.

For example, if you decide to make a single premium top-up of $1,000, the single premium top-up charge would be $1,000 x 5% = $50.

Hence, the single premium top-up would be $1,000 – $50 = $950.

Changing Premium Apportionment Rates Fee

Currently, there are no fees for changing your premium apportionment rate.

Fund Switching Fee

There are no additional fees for switching your fund(s).

Automatic Fund Rebalancing (AFR) Fee

At the moment, there are no fees to automatically rebalance your funds.

Addition of Supplementary Benefits Fee

The fees to add supplementary benefits depend on the benefits chosen, and you may consult your financial representative for more information on the benefits available and the fees chargeable.

Partial Withdrawal Charge

When you make a partial withdrawal from your policy, a percentage of the withdrawal amount is deducted as a partial withdrawal charge.

This percentage depends on the policy year in which you make the partial withdrawal.

For example, if the partial withdrawal occurs in the 5th policy year, for a withdrawal amount of $1,000, the partial withdrawal charge would amount to $1,000 x 50% = $500.

Early Surrender Charge

Just like the partial withdrawal charge, it is applicable only if you surrender during the first 10 years.

This early surrender charge equals a percentage of the account value at the point of surrender, depending on the policy year you decide to surrender.

For example, if the early surrender occurs in the 5th policy year, and the account value at that point in time is $10,000, the early surrender charge would amount to $10,000 x 50% = $5,000.

Fund Management Charge

The fund management charge will depend on which funds you choose to invest in.

Based on a quick check, this ranges between 1.5% and may increase to 2.25% per year.

Also, this charge is not reflected in your fund factsheet – so you’ll have to deduct this from your fund factsheet.

Compulsory Charges

While many fees and charges are listed above, not all of them may apply to you when you take up this policy.

For those who choose not to exercise any of the flexible options such as Premium Holiday, Partial Withdrawals, etc., the only fees you need to pay attention to would be:

• Policy Fee – 2.5% per annum of the account value (Only applicable for the first 10 policy years)
• Fund Management Charges – Varies according to the selected funds (1.5% to 2.25%)

How much will I receive upon maturity of the Great Eastern GREAT Wealth Advantage 2?

Assuming that you invest $200 monthly for 20 years and let it compound for another 10 years, the fund charges are 2.25% per annum, the funds perform at 10% yearly, and you did not take up any flexible options (Premium holiday, Partial Withdrawal, Early Surrender), you can expect the following:

Total Premiums paid after 20 years: $48,000.00

Total Interest Earned: $158,662.25

ROI: 330.55%

The welcome bonus and loyalty bonus have been omitted in our above calculation.

Based on the GreatLink factsheets, fund management fees range from 1.50% to 2.25% per annum. An estimated fund performance of 10% per annum would mean that a growth fund was invested in and a corresponding high fund fee as well.

Since the fund charges are stated in the product summary to be variable, we have assumed the fund charges to be 2.25% per annum in our calculations.

If you intend to take up this ILP, remember to factor the actual fund fees of your selected fund(s) into your calculations and consideration.

Your actual fund management fees are likely lower than 2.25% per annum.

Summary of the GREAT Wealth Advantage 2

References

• Product Summary
• Product Brochure