Prudential PRUActive LinkGuard Review

PRUActive LinkGuard is a regular premium investment-linked whole life insurance policy that allows you to adjust the amount of protection and investment coverage according to your needs.

To make it clear, this is an insurance-based investment-linked plan, and it is not widely recommended.

This policy offers financial security against death, disability, and terminal illness. There is also an option to include early critical illness and critical illness coverage.

The Multiplier benefit, also known as the Multiplier benefit expiry age, is another feature of PRUActive LinkGuard that allows for a higher payout (twice your sum assured) before you reach 50 years old.

We’ve reviewed PRUActive LinkGuard to help you decide if it is the right option for you.

My Review of the Prudential PRUActive LinkGuard

If you’re looking for an investment-linked whole life plan, then the PRUActive LinkGuard seems pretty okay to me.

Premiums start at $75/month, and it offers death, terminal illness, and total and permanent disability coverage on its basic plan.

You also have the option to enhance your protection with its ECI/CI riders as an accelerated payout or an additional sum assured on top of your basic policy.

You can increase or decrease your sum assured at any point in your life to adjust for any changes in your assets/liabilities.

This is great as the older you get, you will likely have lesser liabilities; thus, you can reduce your premium allocation to lesser insurance coverage and more to the investment portion of this policy – something that a traditional whole life insurance policy can’t do.

And as your investment grows, the goal is for your investments to make enough returns to pay for the insurance portion.

However, I do have to say that it’s not the wisest move to choose these types of ILPs.

Firstly, as you grow older, your cost of insurance increases significantly due to a higher risk to the insurer.

After a certain age, you should look to stop paying insurance premiums. If there’s a market downturn, your returns may not be high enough, and you’d have to fork out cash to pay for these premiums.

This is a reason why whole life insurance policies have fixed premiums for a specified number of years – so you don’t have to worry about increasing premium costs when you’re older.

Also, I think the fees are rather high. The premium charge is:

• 75% for the first year,
• 55% for the second year,
• 45% for the third year,
• 5% for years 4-7, and
• 0% thereafter.

So until the fourth year, you’re not really invested as the bulk of it is frontloaded for insurance premiums.

You’re also charged a $5 monthly administration charge – which is 6.67% of your premiums if it’s $75/month.

Notwithstanding the Initial Investment Charges of 5% you’d face every single time you invest.

Also, many Singaporeans despise this type of ILP due to it mixing insurance and investments and the high fees that come with it.

Because it’s also marketed as an ILP, many confuse this type of ILP (insurance-focused) with the investment-focused ILPs – which are 2 completely different things.

Personally, I prefer to separate my insurance and investments – a term life plan with my choice of investments.

This way, I pay a fixed insurance premium amount for a specified number of years without worrying about paying when I’m older and pay lesser fees for investments.

But my preference and what’s best for me is ultimately my choice and is based on my financial situation.

What’s best for me might not be best for you, so it’s important to seek advice from a financial advisor before deciding on getting PRUActive LinkGuard or any other financial products.

This way, you don’t get something that’s not for you.

And based on our experience in running Dollar Bureau over the past many years is that an ILP like this is almost always not for everyone – with many regretting their purchase.

If you need a second opinion on whether the PRUActive LinkGuard is for you, we partner with MAS-licensed financial advisors who can help you.

Click here for a second opinion.

Here’s the Prudential PRUActive LinkGuard in detail:

General Features

Coverage Period

The PruActive LinkGuard covers you for your entire life. However, the Multiplier benefit will only last until you reach 50 years old.

Premium Payment Term

You can choose to pay your premium annually, semi-annually, quarterly or monthly, as shown in the table below:

These payment options offer unique flexibility to suit your financial needs.

Premium Allocation

When applying for PRUActive LinkGuard, you can invest all your premiums in a PRULink fund or divide it among 2 or more funds.

Firstly, your premiums will incur a premium charge following the below rates:

In your first year, 75% of your premiums will be used to pay for the premium charge, and it reduces accordingly, as seen in the table above.

Thus,

• Only 25% is allocated to investments in the first year,
• 45% in the second year, 55% in the third year,
• 95% in the fourth to the seventh year, and
• 100% in the following years.

The remainder of the premiums will then be allocated to your selected fund proportions.

PruActive LinkGuard Key Features

Change of Premium Distribution

You can adjust your regular premiums’ allocation but only in increments or decrements of 5% and among the currently available PRULink funds.

The change will take effect when you make your next premium payment.

The fund may sell units from your invested PRULink funds each month to cover administration and assurance charges using the bid price.

The number of units sold is based on your current investment in each fund at the time of sale.

Fund Switching

If you have enough units in your account, you can switch them into other available PRULink funds.

The remaining units in the fund cannot be less than the specified minimum, which is calculated using the bid price at the time of the switch.

If the value of your remaining units is lower than the minimum amount, all units will be moved out of the fund.

The minimum amount for switching funds may change anytime and will be communicated during your application.

Currently, the policy does not charge for fund switches. However, an administration fee may apply.

Increasing Your Sum Assured

Suppose you need to increase your coverage for death, total and permanent disability, terminal illness, or critical illness, you can adjust the sum assured according to your needs.

Note that you must include Crisis Protect or Crisis Care in your policy if you want to raise the sum assured for critical illness.

Increasing the sum assured will also result in a higher regular premium, with the increased portion following different charge rates from the first year.

On the other hand, if you only need to increase the critical illness benefit within the maximum allowed sums, no extra premiums are required.

The Multiplier benefit and assurance charges will also be adjusted based on the revised sum assured.

To qualify for a sum assured increase, you must have paid your regular premium and meet certain age and health requirements.

For instance, you must be:

• Under 60 to increase death, terminal illness, total and permanent disability, and Crisis Care benefits.
• Under 50 to increase Crisis Protect benefit.

Boost Your Sum Assured Without Medical Underwriting

With this policy, you can increase your sum assured for death, total and permanent disability, and terminal illness without requiring evidence of good health.

This unique feature is applicable for specific life events such as:

• Marriage,
• Divorce,
• Birth of a baby,
• Death of a spouse,
• Legal adoption,
• The marriage of your child, or
• Your child enrolling in school.

However, it’s important to note that this feature can only be used twice during your lifetime.

If you wish to increase your sum assured for death, total and permanent disability, and terminal illness due to a life event, you should do so within 3 months from the date of that event.

Additionally, the increase cannot exceed $150,000 in sum assured. This includes any Multiplier benefit or 25% of the original sum assured, whichever is lower.

To qualify for the increase, you must be under 50, and all premiums due under your policy must be paid.

Lastly, you should not have made any claims for any of your policies with Prudential.

Reduce Your Sum Assured

The policy also offers the option to reduce your sum assured for death, total and permanent disability, and terminal illness.

To do this, you must have paid the regular premiums for 25 months in full.

On the same note, the reduced amount cannot be lower than the indicated minimum sum assured and regular premium.

If you’ve previously increased the sum assured, you must pay 25 months of the revised regular premiums before making any reductions.

Notably, the reduction will apply equally to all 3 benefits, and your regular premium will decrease.

Nevertheless, it’s important to remember that reducing the death benefit may also affect the maximum sum assured allowed for critical illness benefits and result in a reduction of their sum assured.

You can reduce the sum assured if you have Crisis Protect or Crisis Care Benefit. However, your regular premium will remain unchanged if the sum assured for the critical illness benefit is reduced.

If you reduce the sums assured for death, terminal illness, total and permanent disability, and critical illness benefits, then both the Multiplier benefit and assurance charges will decrease based on the revised sum assured.

Reduce Your Sum Assured To $0

You can decrease your sum assured for death, total and permanent disability, terminal illness, and Crisis Care to $0 after either 10 years from the cover start date of your policy or the last increase in your sum assured, whichever is later.

Alternatively, you can do so once you reach the age of 50. However, you must continue paying the minimum premium even after reducing the assured sum.

Once you reduce these sums assured to $0, you will no longer be required to pay assurance charges for them, but you will still have to pay the monthly administration charges.

Top-up with Investment Booster (Regular and Lump Sum)

Regular

For this plan, you can increase your investment by paying an additional premium, called the Investment Booster (Regular), as long as you are under 65.

You can pay this booster at the same frequency as your regular premium.

In addition, it must be equal to or more than $75, $225, $450 and $900 for monthly, quarterly, half-yearly, and yearly payments, respectively.

The premium charge is 3%, and the remaining 97% of your Investment Booster premium is used to buy units at the bid price in the PRULink fund or funds you have selected.

Lump Sum

The plan also allows you to increase your investment with an additional one-time premium (lump sum payment).

The minimum premium for this booster is $1,000, with a premium charge of 3%.

In both cases, you can invest all of it in one PRULink fund or divide it among 2 or more funds.

However, you must invest at least 5% in any chosen fund, and subsequent adjustments should be made in multiples of 5%.

Reinstate Your Policy

If your policy lapses due to non-payment of regular premiums and insufficient units in your account, you can reinstate it, subject to certain conditions such as:

• If reinstatement of policy is applied 24 months from the end date,
• All premiums owed are paid,
• You are under 60 years old, and
• Satisfactory health evidence of the insured is provided (you will bear the costs involved)

Partial Withdrawals

You can partially withdraw from your account by requesting the plan to sell some of your units.

However, certain conditions must be met for the withdrawal to be approved.

For example, the withdrawal amount must be at least $1,000, and the account balance after withdrawal must be at least $1,000 based on the bid price.

In addition, you can only be allowed to do so after 25 months of making regular premiums.

If you have not completed 25 months of regular premiums, partial withdrawals are not allowed unless you have made top-ups with an Investment Booster for a regular or lump sum payment, and the maximum withdrawal you can make has to be lesser than the total top-ups made.

Protection

Death Benefit

If death occurs before the Multiplier benefit expiry age, your beneficiaries will receive the Multiplier benefit of the Death benefit.

This includes the value of any units in the policy minus any debts owed.

The Multiplier benefit is twice the sum assured in the event of death and is payable before you turn 50 years old.

Once the company receives proof of death, your units are valued according to the bid price.

Accelerated Terminal Illness Benefit

If you are diagnosed with a terminal illness before the Multiplier benefit expiry age, you will receive the Multiplier benefit minus any debt owed to the policy.

If the diagnosis happens on or after the Multiplier benefit expiry age, you will receive the sum assured for accelerated terminal illness as stated in your life assurance certificate minus any owed amounts.

If this sum matches the death benefit, you will receive all units in your account, and the policy ends.

Similarly, the Multiplier benefit is double the sum assured and is paid before you reach 50 years.

If the sum assured for the Accelerated Terminal Illness Benefit matches that of the Death Benefit, your policy will end.

Also, if the sum assured for the Terminal Illness Benefit is lower than that of the Death Benefit, it will be terminated instead.

The policy will continue for the Death Benefit but with a reduced sum assured amount equal to the payout from the Accelerated Terminal Illness benefit.

So in simple terms, if you have a death benefit of $100,000 and the Accelerated Terminal Illness Benefit pays out $70,000, your remaining Death Benefit will be $30,000.

Total and Permanent Disability Benefit

If you are totally and permanently disabled (TPD) before the cover end date, you will receive the Total and Permanent Disability Benefit as outlined below:

Below 1 Year

You will receive 20% of the Multiplier benefit of TPD minus any outstanding debts owed to the policy.

The policy will then be terminated, and you will receive payment for the value of all units in your account.

1 to 69 Years

If you become totally and permanently disabled before reaching the Multiplier benefit expiry age, you will receive a benefit twice the sum assured for TPD.

This amount is less any outstanding debts owed to the policy.

If the sum assured equals the death benefit, you will receive a payment for all units in your account, and the policy ends.

On the other hand, if disability occurs on or after reaching the Multiplier benefit expiry age, you will receive only the sum assured minus any debts owed.

The plan uses the bid price at the payout time to determine unit value.

If a disability is confirmed, a maximum benefit of $2,000,000 will be paid out for TPD.

However, this will only be paid out 6 months after confirmation of the onset of the disability.

If the Total and Permanent Disability Benefit sum assured is more than $2,000,000, you will receive the remaining amount in a lump sum 12 months from the first payment or upon death, whichever comes first.

Upon Recovery

If you recover from a total and permanent disability before the balance sum assured is due for payment, the plan stops the payment immediately.

However, you can still continue your policy to get the death and terminal illness benefits by paying the necessary premiums.

In such cases, the sum assured is equal to the remaining balance sum assured or amounts above $2,000,000.

The Multiplier benefit will be calculated based on this remaining balance sum assured.

You can get the TPD benefit if you cannot perform any Activities of Daily Living (ADLs).

ADLs are basic self-care tasks that individuals must perform daily. It includes washing, dressing, feeding, toileting, mobility, and transferring.

No Lapse Period

Suppose your policy is within 10 years from the start date and is covered by the No Lapse Period.

In that case, the Death Benefit, Accelerated Terminal Benefit, and Total and Permanent Disability Benefit will be paid even if there are insufficient funds to cover monthly charges.

Any previously deducted administration and assurance charges will not be refunded.

Optional Rider Add-Ons

You can also bump up your coverage with the following options or benefits.

Early Crisis Care and Crisis Care

This rider protects against 35 early-stage critical illnesses and 56 critical illnesses.

In addition, you can receive a payout in the event of an illness or accident affecting major organs through the Crisis Care Accelerator Benefit.

The policy provides an accelerated lump sum payout from death coverage if you are diagnosed with any of the covered early-stage critical illnesses or critical illnesses.

It also covers 4 special benefits, like benign tumours requiring surgical excision and 11 Juvenile benefits covering conditions such as ADHD, Autism, and Dyslexia.

Early Crisis Protect and Crisis Protect

The Early Crisis Care and Crisis Care Protect rider covers 35 early-stage critical illnesses and 56 critical illnesses.

With the Crisis Protect Accelerator Benefit, you can receive a payout if you suffer from an illness or accident that affects major organs without affecting your death coverage.

If you’re diagnosed with any of the covered early critical illnesses or critical illnesses, Crisis Care provides an additional lump sum payout, as compared to the Early Crisis Care and Crisis Care riders.

Additionally, coverage is included for 4 special benefits, such as benign tumours requiring surgical excision and 11 Juvenile benefits covering conditions like ADHD, Autism and Dyslexia.

Others

With the PRUActive LinkGuard policy, you can add supplementary benefits to your policy anytime.

This is provided that the benefit is still available and you are paying your regular premiums.

Additionally, you must be in good health, within the age limits, and pay extra premiums while ensuring your policy has not ended.

You can enhance your policy with these additional benefits by meeting these requirements.

However, it’s important to note that availability and eligibility for these benefits may vary. Therefore, it’s best to consult your insurer for specific details.

Here is a list of supplementary benefits offered by the plan:

• Accident Assist
• Crisis Cover Kids
• Crisis Waiver III
• Disability Provider III
• Early Payer Security
• Early Stage Crisis Waiver
• Fracture Care PA
• Payer Security III
• Payer Security Plus
• PruSmart Lady II

Policy Charges and Fees

The following charges are applicable for the PRUActive LinkGuard plan.

Premium Charge

A premium charge is deducted when you pay your regular premium, Investment Booster (Regular), or Investment Booster (Lump Sum).

The remaining amount will be used to purchase units in the fund or funds of your choice.

The premium charge is calculated by multiplying the premium paid by the applicable premium charge rate.

Here is a table to illustrate this:

For each Investment Booster (Regular) or Investment Booster (Lump Sum) premium, a premium charge of 3% will be deducted.

Administration Charge

You will be billed an administration charge of $5 on your policy’s first premium due date and every month thereafter on the same day.

Assurance Charge

You will be billed an assurance charge from your policy’s first premium due date and on the same day every month thereafter.

This charge covers the basic benefits of death, total and permanent disability, terminal illness, and Crisis Care or Crisis Protect.

This fee is already included in the premiums you paid, and it depends on your age, smoker status, and gender.

Refer to Appendix A in the product summary below for these charges.

Fund-Related Charges

The fund-related charges vary based on which funds you or your financial advisor have decided to invest in.

Here are the funds that you have access to via the PRUActive LinkGuard.

There are 2 fund-related charges you will incur – Continuing Investment Charge and Initial Investment Charge.

Continuing Investment Charge

This fee is charged by the fund yearly to the fund managers managing your respective sub-funds.

According to Prudential, the daily investment charge is deducted proportionally throughout the year and is included in the price of the corresponding PRULink fund.

Prudential also states that this charge is not an extra fee added to the policy.

I’m not sure what Prudential meant when it says it’s not an extra fee added to the policy, but I will presume that the annualised returns you see from your funds have already considered the Continuing Investment Charge.

Initial Investment Charge

This fee is charged every time you invest with the fund manager. This charge varies depending on the fund you chose, but based on a quick glance, I’ve seen the Initial Investment Charge go as high as 5%.

This means that every time you make a regular premium payment, the investment portion of your premium will incur this charge.

For example, if your premium is $100 monthly, it will go through the Premium Charges first, and whatever is remaining will incur the Initial Investment Charge.

Check the fund factsheet for both the Continuing Investment Charge and Initial Investment Charge.

Surrender Charge

You can surrender your policy at any point in time.

However, a surrender charge will be applied based on the table below:

You will incur a surrender charge of 100% within your policy’s first 2 premium-paying years, 50% within 3 premium-paying years, and 0% thereafter.

It is calculated as a percentage of the sum of the allocated premiums in your account.

What this means is that although you will incur 0% in surrender charges when you surrender it after 3 years, you will not receive your entire premiums back as you would with an investment-focused ILP.

You will only receive whatever premiums were invested in your account – which means any leftovers after paying for the premium, administration, assurance, and fund-related charges.

Summary of the PRUActive LinkGuard