Manulife Signature Income (III) Review | 3-Generational Payouts

Manulife Signature Income III is a single premium participating whole-life policy providing insurance coverage and investing part of your premium contributions into participating funds.

Although this is marketed as a whole-life policy, the Manulife Signature Income III is catered to legacy planning, allowing you to leave a monthly income for yourself and your kids, and a lump sum amount for your grandchildren.

As with other par plans, it includes guaranteed and non-guaranteed portions and may not be appropriate if you want all the benefits guaranteed.

Here is our review of the Manulife Signature Income III.

My Review of the Manulife Signature Income (III)

I would say that the Manulife Signature Income III is a pretty great whole life policy for high-net-worth individuals, especially when used for legacy planning.

You start receiving your payouts from as early as 37 months, and your capital is 80% guaranteed right out of the box.

Based on my calculations, if you invested $1,000,000 at 31 years old and receive payouts until you’re 120, that’s up to $1,954,800 in returns based on a 3.00% p.a. Interest – that’s 195.48% in returns.

Your maturity benefit based on a 3.00% yearly return is also estimated to be $3,067,583 and even higher at $5,729,484 with a 4.25% p.a. projected return.

Again, you’ll have to take this with a pinch of salt as it includes the non-guaranteed portion.

If you’re prudent and only look at the guaranteed payouts, it’s $1,116,720 after 90 years, excluding your guaranteed surrender value of $800,000 – making it a total of $1,916,720.

Also, let’s not forget that the Manulife Signature Income III is meant for legacy planning for up to 3 generations.

Thus, you can change the policy’s life insured even after collecting your monthly payouts to your children, and they can continue receiving the monthly benefits until they pass on.

And when they pass on, your grandkids will benefit from the death benefit this policy offers – of which at least $1,050,000 is guaranteed.

Let’s assume you bought this policy when you were 31 years old to make things easier for you to imagine.

You hold this policy under your name up till you are 85 years old, and then you transfer it to your kids.

Assuming you have a child when you’re 35, the child will be 50 years old when you transfer it to them.

Your child will then receive the monthly benefits up until the pass away at, let’s say, 87, as it’s the average life expectancy of a Singaporean at the time of writing.

That’s a total of 85 years (assuming you opted to start receiving monthly payouts at the 37th month) of obtaining monthly benefits from your initial investment, more if you or your child lives longer than the average life expectancy.

When your child passes, your grandchildren will receive the death benefit.

That’s the difference and the beauty of whole life policies meant for legacy planning – to leave a legacy for future generations.

One thing that I must say I find weird is that the 80% guaranteed surrender value doesn’t change despite how long you’ve had this policy.

I would think that after having this policy for a set number of years – let’s say 25 years – the guaranteed surrender value would go up to 100%, and you would get your entire capital back, but I guess Manulife wouldn’t want you to surrender your policy and would want you to hold it for your future generations.

Which totally makes sense to me.

Overall, I’d say Manulife’s Signature Income III is a pretty good plan that you should definitely consider.

If you are still not sure whether to take it up or are unsure if there are better policies in the market for you, I suggest engaging an unbiased financial advisor for a second opinion.

This is especially important as it’s a long-term policy, and it’s meant to provide for you in your golden years or for your future generations.

So, taking the time to understand if the Manulife Signature Income (III) is any good or if there are better alternatives in the market is essential.

If you’d like a second opinion, we partner with experienced MAS-licensed financial advisors to help you with this.

Interested to talk to one of them?

Click here for a free second opinion.

Let’s now explore the Manulife Signature Income (III) in detail:

Criteria

• The life insured has to be minimally 18 years old
• There is a minimum monthly guaranteed payout of $250
  • Thus, the minimum single premium investment is $241,778.497

Investment of Assets

The goal of the investment strategy of Manulife Signature Income III’s Participating Sub-Funds is to make the most out of long-term returns that fulfil all expected benefits.

This includes ensuring the fund’s solvency, meeting the guaranteed benefits, and taking advantage of new opportunities.

The strategic asset allocation for the participating fund that this product is invested in is as follows:

The current asset allocation closely follows the target asset allocation, which consists mainly of government and corporate bonds for your guaranteed portion.

Equities and real estate offer potentially higher returns needed for non-guaranteed bonuses in participating policies.

On the other hand, cash and money market instruments constitute the fixed-income portfolio.

Please note that this Participating Sub-Fund was set up in April 2021, so any historical investment rate of returns prior to that are not displayed.

Product Features

The Manulife Signature Income III has several benefits and bonuses that must be considered when deciding if it’s good for you.

Monthly Income Benefits

The Manulife Signature Income III offers you monthly income benefits, which means you can get monthly payouts after selecting when you want to start receiving these payouts.

You can start receiving the monthly income on your 37th or 49th policy anniversary or reinvest them for higher bonuses.

This payout is broken down into 2 portions – your guaranteed monthly income and non-guaranteed monthly income.

Guaranteed Monthly Income

Under the guaranteed monthly income you’ll receive, you are guaranteed a consistent income stream to meet your needs during retirement.

The guaranteed amount you want to receive has to be decided before policy inception and is equal to 1.2408% of the sum covered per year divided by 12.

This means that if you have a sum assured of $1,000,000, your yearly payout will be $12,408, and your monthly payout will be $1,034.

Another way to phrase it would be that if you’re looking for a guaranteed monthly income of $1,034, you will need to invest $1,000,000 now in a single premium.

This is only the guaranteed monthly income and excludes the non-guaranteed portion.

Once the policy is in effect, the starting date of your monthly payouts cannot be changed.

You may be thinking, why would I need to invest a lump sum of $1,000,000 just for $1,034 in guaranteed monthly income when you can do it for much, much lesser on policies like the Manulife RetireReady Plus?

I will cover this later under the Change of Life Insured section, so keep reading.

Non-guaranteed Monthly Income

As with all par plans, a portion of your investments will be used to invest in the insurer’s sub-fund.

As you can’t predict how the markets will perform, the returns you get from this will be non-guaranteed.

The non-guaranteed monthly income is determined by multiplying the (actual) rate of return against the sum insured and dividing the derived value by 12.

Here’s a table by Manulife showing how much you’ll receive in non-guaranteed payouts based on 4.25% and 3.00% p.a returns, depending on when you’d like to receive your payouts.

As you can see, if you opt to receive monthly income beginning with the 37th policy anniversary, the maturity, claim, and surrender bonuses declared will be less than those stated for the other option.

Take note that it’s common for all insurers to use 4.25% and 3.00% as projected returns, but because this is non-guaranteed, I will always recommend you to take this with a pinch of salt and assume the worst.

I mean, this is your retirement we’re talking about – and the point of financial planning is to consider the worst-case scenarios too.

But to be fair to insurance companies, they’re running a business and not giving you your non-guaranteed portion would be against their interest – they want you to keep your money with them, so it’s in their best bet to keep you happy.

Here’s the policy illustration of how much you can expect to receive in yearly income with an investment of $1,000,000.00:

Note: The above illustration assumes that any Guaranteed and Non-guaranteed Monthly Income is paid out on a monthly basis.

So even at 3.00% illustrated returns, you can expect $21,720 per year or $1,810 monthly in guaranteed and non-guaranteed payouts up until you are 120 years old!

This is one of the reasons that make the Manulife Signature Income III differ from a regular retirement plan is that you get to receive payouts up to 120 years old, and assuming you bought this plan at 31 years old, that’s 90 years of payouts totalling $1,954,800!

Of course, if you consider just the guaranteed portion (which is what our team always recommends), it’s $1,116,720 after 90 years – which is still pretty good!

Surrender Benefit

You will receive the following when you fully surrender your policy:

• The guaranteed surrender value;
• The non-guaranteed surrender bonus (if any)
• The surrender value booster benefit (if any), less any amount owing to Manulife.
• Any accumulated monthly income will also be paid out with interest.

You cannot surrender this plan partially.

Surrender Value Booster Benefit

The surrender value booster benefit equals 80% of the single premium minus the guaranteed surrender value and surrender bonus.

This means that on full surrender, the amount you receive before any amounts owed is at least 80% of the policy’s single premium.

Assuming you’ve invested $1,000,000, here’s the policy illustration:

Note: Surrender Value Booster Benefit is a non-participating embedded benefit that ensures that the total surrender value you receive upon full policy surrender is at least 80% of the single premium.

As you can see, 80% of your investment is immediately protected the day your policy is incepted. Other plans in the market usually guarantee the same amount (sometimes more), only after 2 years.

Also, it will roughly take 16 to 25 years for your policy to breakeven, depending on the performance of the participating funds.

Maturity Benefit

After your 120th birthday, which becomes the policy’s maturity date or benefit end date, you will receive:

• The guaranteed surrender value
• The non-guaranteed maturity bonus (if any), less any amount owing.

Also, the maturity benefit includes any remaining monthly income to earn interest.

Thus, based on the table above, this can range between $3,067,583 and $5,729,484, depending on the performance of the par funds.

Change of Life Insured

After 2 years from the policy’s issue date, you may request to modify the life insured, subject to the policy’s administrative and underwriting criteria.

You must have an insurable interest in the new life insured at the moment of change.

If Manulife accepts your request, they have the right to charge an administration fee.

If you bought this policy as a corporation, you may alter the life insured under this policy at any point throughout the policy term, and there is no limit to how many times you may do so.

You may change the life insured under this policy no more than twice throughout the policy period if you are an individual.

This might not seem too important to you, but it’s one of the features of whole life plans designed for legacy planning.

Firstly, a normal annuity plan like the Manulife RetireReady (many will compare this to an annuity because of its monthly payout feature), generally does not allow you to change the life insured, which means you are the sole person receiving monthly payouts, and your children/beneficiaries will receive the death benefit upon your passing.

Though this can happen with the Manulife Signature Income III too, these types of plans let you change the life insured twice, from which your children and your grandchildren can benefit.

You receive payouts until you change the life insured (assuming it’s your child), and they receive it until they pass on, whereby your grandchildren can enjoy the death benefit.

That means you’ll receive much more payouts in the long run than traditional annuity plans.

Here’s an illustration by Manulife:

Protection

Death Benefit

When the life insured passes, their beneficiaries will receive a lump-sum payment of;

• 105% of a single premium
• Non-guaranteed claim bonus (if any), less any amount owing to us.

Any monthly income left to accumulate will also be paid out with interest (if any).

Like most policies, the policy terminates immediately after the payment of the death benefit claim.

Here’s the policy illustration assuming you invested $1,000,000:

Note: The above illustration does not include the Guaranteed and Non-guaranteed Monthly Income.

Terminal Illness (TI) Benefit

If you are diagnosed with a terminal illness during the policy period, you will be paid the death benefit in advance in a lump payment.

TI is defined as an illness that, in the opinion of a designated medical examiner, is likely to result in death within 12 months of diagnosis.

Policy Bonuses

Manulife Signature Income III provides both guaranteed and non-guaranteed benefits. The guaranteed ones will be paid regardless of the performance of its participating fund.

You can also benefit from other bonus components such as non-guaranteed monthly income, maturity, claim, and surrender bonuses.

However, these amounts are not guaranteed and can vary depending on the performance of their invested funds.

The applicable bonus rate declared each year by the board of directors (as recommended by the appointed actuary) will determine the final benefit payment amount.

Maturity bonus

Upon maturity of your Manulife Signature Income III plan, a non-guaranteed maturity bonus may be declared.

This extra bonus is given as a percentage of the guaranteed surrender value, based on when you decided to receive the monthly income and your issue age.

Claim bonus

Similarly, an additional non-guaranteed claim bonus may be paid out upon claiming the policy.

This claim bonus is also expressed as a percentage of the guaranteed surrender value.

Its amount depends on when you chose to collect the monthly income and in which policy year the event causing you to make your claim occurs.

Surrender bonus

When you surrender your Manulife Signature Income III policy, a non-guaranteed surrender bonus may be declared.

This bonus is given as a percentage of the guaranteed surrender value.

Its amount depends on when you decided to receive the monthly income and the policy year in which the event resulted in the surrender.

Summary Of Features And Benefits of the Manulife Signature Income (III)