Great Eastern’s GREAT Prime Rewards III is a single premium participating annuity plan that provides guaranteed financial payouts to secure your future in golden years.
The plan offers financial protection against unfortunate events such as death, terminal illness, total and permanent disability.
Here we have a comprehensive review of Great Eastern’s GREAT Prime Rewards III, including features, benefits, and any valuable information to help you decide if it’s the right option.
Keep reading.
My Review of the Great Eastern GREAT Prime Rewards III
Great Eastern’s GREAT Prime Rewards III is a single premium participating annuity plan that stands out for its blend of savings and insurance protection, aimed at providing you with peace of mind during your golden years.
Let’s dive into the specifics to see how it might fit into your financial planning.
Features That Stand Out
- Single Premium Payment: The requirement for a one-time lump sum payment, starting at $10,000, simplifies your financial commitment. While this eliminates the flexibility of monthly payments, it also means you’re fully invested from the get-go, setting a clear path to your financial goals.
- Payout Options: With options for 4 payout periods over 15 or 20 years, including an accumulation period, this plan offers a degree of flexibility in how you receive your benefits. Whether you opt for immediate payouts after the first year or a combination of accumulation and payout periods, these choices allow you to tailor the plan to your retirement timeline.
- Capital Guarantee: The assurance of up to a 100% capital guarantee after the 5th year is a significant safety net, ensuring that your initial investment is protected.
- Guaranteed and Non-guaranteed Payouts: The mix of guaranteed payouts provides a stable income stream, while the potential for non-guaranteed bonuses adds an element of growth based on the fund’s performance. This balance between stability and growth potential is crucial for long-term financial planning.
Considerations and Drawbacks
- Lack of Monthly Payouts: The annual payout structure may not suit everyone, especially if you prefer a more regular income stream to manage monthly expenses in retirement.
- Investment Performance Risks: While the plan includes non-guaranteed payouts that could enhance your returns, these are subject to the performance of the participating fund. The past fluctuation in investment returns highlights the inherent risk in banking on these bonuses for your retirement income. However, Great Eastern’s par funds are still pretty decent.
- Surrender Charges: Early termination of the policy can be costly, underscoring the importance of being certain about your long-term financial capacity and commitment before entering the plan.
Despite the appealing features of GREAT Prime Rewards III, it’s crucial to approach this decision with caution.
The commitment to a single premium payment and the long-term nature of the policy underscores the need for thorough research and comparison.
The prospect of a long policy term of up to 20 years, coupled with the variability in investment returns, suggests that extra diligence is necessary to avoid potential financial missteps.
I strongly recommend comparing this policy against other options in the market.
Our post on the best retirement plans in Singapore can serve as a starting point for this comparison.
Additionally, consulting with one of our partnered unbiased financial advisors can provide a second opinion that’s tailored to your unique financial situation.
If you’re interested in a second opinion or a comparison session, click here.
Let’s breakdown the GREAT Prime Rewards III in detail:
Criteria
Premium Payment Options
The policy is a single premium payment option which means you can only make one lump sum payment at the commencement of the plan.
Because of this, monthly premium payments are not allowed, and you cannot change the premium rates midway.
Premiums start at $10,000.
Payout Options
This plan provides you with an option of 4 payout periods, with 2 policy terms – 15 or 20 years.
The policy terms include an accumulation period and payout period.
This means that the sum of your accumulation and payout period will either be 15 or 20 years.
The table below is a summary of the yearly payouts.
As you can see, (a) is a 15-year policy term with 5 years of accumulation and 10 years of payouts.
(b) has a policy term of 20 years with a payout period of 20 years and no accumulation period – meaning you begin getting your payouts at the end of the 1st policy year.
Features
The Great Eastern GREAT Prime Rewards III provides you with a wide variety of features which are essential factors to consider when choosing an annuity plan.
Capital Guarantee
The plan offers up to a 100% capital guarantee after the end of year 5.
Guaranteed Payout
With a guaranteed payout, you are assured of a stable income stream to cater to your needs during retirement.
Worth noting, the guaranteed benefits are already declared and are payable regardless of the performance of the participating funds.
Non-guaranteed Payouts
The non-guaranteed benefits are bonuses to be earned in the future but not yet declared.
These depend on how the participating fund performs and are approved by the board before declaration and payment.
The non-guaranteed bonuses fall into 2 categories, cash and terminal bonuses. The cash bonus is first declared and becomes guaranteed before eventually being paid.
With the GREAT Prime Rewards III, you can get a one-time lump sum payment or terminal bonus after submitting a claim, maturity, or during the surrender.
Notably, the terminal bonus terms are reviewed every year.
The table below shows the actual investment mix and 2021’s strategic asset allocation for the participating fund on 31st December 2020.
Quite often, the performance of the participating fund depends on many factors, such as the rate of return, claims experience, and expenses incurred.
In this case, the investment rate of return has not been constant, as shown in the table below.
On the same note, the total expense ratio can significantly affect the eventual declaration of the non-guaranteed bonus.
The table below is an example of the previous expense ratio though it’s not an indication of future expenses.
Survival Benefit
The survival benefit also forms part of the annual payouts throughout the payout period.
It’s a guaranteed amount paid as a certain percentage of the single premium if you survive to the maturity of the policy year during the payout period.
The table below summarises the survival benefit payout percentages over different policy terms.
You may choose to withdraw the payment or allow the policy to keep and, in return, earn some interest at the non-guaranteed rate.
Surrender Value
You can surrender your policy as long as you’ve made your premium payment. Early termination can be expensive.
Check with your financial advisor for the surrender value of your policy.
Protection
Death Benefit
When death occurs, your beneficiaries will receive a lump-sum payment of;
- 110% of a single premium minus survival benefits previously paid or;
- The guaranteed surrender value of the policy, whichever is higher, including any terminal bonus.
Like most policies, the death benefit ends immediately after a claim.
Total and Permanent Disability Benefit
You will receive the death benefit as a single payment if you suffer from total and permanent disability or TPD.
There are 2 types of TPD covered under this policy;
i) Presumptive TPD
Presumptive TPD is applicable for the entire of the policy term and refers to a disability that occurs when you experience irrecoverable loss of;
- Sight in both your eyes,
- Unable to use two limbs
- Loss of sight on one year and unable to use one limb
ii) Other forms of TPD
Other forms of TPD are not presumptive and occur in the following situations.
- If you are above 15 years and suffer from a disability that causes incapacity to perform meaningful employment.
- If the assured is aged below 15 years and the TPD leads to confinement to a hospital or care facility where the child requires all-around attention for six months.
In both cases, the maximum claim payable for the TPD benefit is S$5,000,000.
Terminal Illness Benefit
Under this benefit, you will be paid a death benefit as a single amount or lump sum in case of a diagnosis with a terminal illness that can lead to death within 12 months.
However, the claim must be accompanied by a certification from an approved specialist and confirmed by a doctor and approved by the policy.
Subsequently, the TI benefit ends immediately after a claim. However, all debts owed to the policy are deducted before making a payment.
Summary Of Features And Benefits
| Cash and Cash Withdrawal Benefits | |
| Cash value | Available |
| Cash withdrawal benefits | Available |
| Health and Insurance Coverage | |
| Death Coverage | Available |
| Total Permanent Disability | Available |
| Terminal Illness | 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 | Not available |
| Other Benefits | |
| Lump-Sum Maturity Benefit | Available |
| Survival Benefit | Available |
| Guaranteed and Non-guaranteed Benefits | Available |
Illustration
Here we have an example to help you understand the policy much better.
John is a 35-year-old Personal Banker who plans on retiring when he hits 50 years. He also plans to start a small business at this age.
To get started, he signs up for the GREAT Prime Rewards III and chooses the 5+15 policy term.
This essentially means that he can accumulate the funds for 5 years and subsequently receive guaranteed payouts for 15 years.
Because the plan is a single premium payment annuity option, he pays a single premium of S$100,000.
At 40 years, the accumulation period comes to an end. After this, there are two payment options, as we shall see in the following scenarios.
Scenario 1
John opts for the annual cash payout option. In this regard, he will receive S$9,800 each year for a period of 15 years.
The payout starts at the end of the 6th year. The total payout comprises guaranteed and non-guaranteed payouts of S$7,000 and S$2,800 respectively.
At 55 years, the policy ends, and by then, John will have received S$147,000, as highlighted in the table below.
| Total guaranteed payout (7000×15) | S$105,000 |
| Total non-guaranteed payouts | S$42,000 |
| Total payout amount | S$147,000 |
| Single premium Increase | 147% |
Scenario 2
In the second scenario, John opts for the accumulation option where he doesn’t receive annual payouts but chooses to accumulate the yearly cash payouts and earn more interest.
At 55 years, John receives a total of S$175,732 as benefits. Here is a table to illustrate.
| Accumulated guaranteed portion (7000×15) | S$105,000 |
| Accumulated non-guaranteed portion | S$42,000 |
| Interest earned | S$28,732 |
| Total payout amount | S$175,732 |
| Single premium Increase | 175.7% |
Notes: Numbers are based on a 35-year old male and non-smoker. As well, the non-guaranteed benefit is based on an IIRR of the participating fund at 4.25% p.a.
