Prudential Savings Plan Malaysia Review
Having a savings plan is important whether you are planning a dream holiday, saving for rainy days, saving for your children’s education, etc. A savings plan ensures that your money is able to grow and is secure for future use. It is a good way to grow your wealth and ensure that your future and that of your family is secured.
Savings help grow wealth within a period of time
Prudential Savings Plan
Prudential savings plan is one of the many products being offered by Prudential Assurance Malaysia Berhad. It is a type of With-profit investment plan which is designed to provide potential capital growth on your investments while allowing you to take regular or one-off withdrawals.
You can invest by making a single payment or regular payments on a monthly basis. If you choose to make a single payment, you will have to wait for a period of five years to be able to withdraw from your account. If on the other hand, you choose the regular payments method, you will be required to pay for a minimum of five years and wait for at least ten years to be able to withdraw from your account.
You can invest up to a maximum amount of £500,000.
How Prudential Savings Works
Prudential savings account and investment bonds are long-term to medium investments that allow a mix of regular and single investments. Your money is invested in the Prudential With-Profit Fund after applying the allocation rate and deducting the initial charge.
This investment helps smooth the return of your money for the period of time that you hold the account. Your money is pooled with those of the other Prudential investors to create a fund that is then invested in several investment options including government bonds, company shares, properties etc. You will then receive your share of the bonuses depending on your share of profits. These plans also offer a small amount on terminal illness and life insurance cover.
There are two types of bonuses: Regular bonus which may be added regularly every year, and the final bonus which may be added when you withdraw money from your account. The amount of bonus you get will depend on how much is in your account. Accounts with an amount less than £6000 receive a reduced bonus rate.
Note that the value of an investment may increase or reduce with time which means that the bonuses are not guaranteed and you may not be able to get back the amount you had invested.
Types of Savings Plans at Prudential
There are six types of savings product available at Prudential that you can choose from. These include PRUgrowth, PRUcash, PRUcash double reward, PRUcash premier, PRUlink investor, and PRUlink global investor account. Here is a summary of these different savings products; for more details on the products, we recommend that you contact Prudential Assurance Malaysia Berhad (PAMB).
This plan has a short premium payment term of 5 or 10 years. It helps you grow and secure your savings by offering you yearly entitlement of Annual Boosters and at the same time providing an insurance coverage of death or total and permanent disability. A 100% of sum assured together with any other benefits that you are entitled to are payable upon death, total and permanent disability, policy maturity or when you surrender the policy.
This plan offers a guaranteed payout of 6% of the sum assured every two years before the policy matures to give you some liquidity. A 100% of the sum assured and all the other guaranteed and non-guaranteed benefits (if any) are paid upon the death or permanent and total disablement of the policyholder or upon surrender or maturity of the policy. The minimum sum assured that you can get from this policy is RM 10,000, while the maximum sum assured for children under the age of 16 is RM 500,000.
There are several optional riders that you can buy with this policy including cash boosters (for your savings), crisis cover benefits (in case you become critically ill) and others.
PRUcash double reward
In this plan, you are able to save and receive a double annual guaranteed payout of 3% from the first to the fifth year of the policy and 6% from the sixth policy year onwards. The sum assured will then double the initial sum assured (200%) from policy year six for death, total and permanent disability coverage. Upon maturity of the policy, you are entitled to a lump sum maturity benefits which include the 100%of the initial sum assured together with all the first year survival benefits and all other applicable bonuses.
With premium payment term of 10 years, this policy offers a guaranteed annual payout of 4% of the sum assured from the end of the 10th policy year onwards except for the final policy year. A 100% of the sum assured plus total bonuses (if any) are payable upon death, total and permanent disability, and policy maturity or upon surrender of the policy.
This plan is a single premium investment-linked insurance that allows you to manage your investment and also keeps you protected. You are able to invest in various local funds and also get life insurance coverage of 125% of your single premium or the total value of your units from RM 5000- whichever is higher. The minimum premium that you can invest is RM 4000 and you can switch between local funds whenever you want.
PRUlink global investor
This is also a single premium investment-linked insurance that allows you to manage your investment and also get protected. Just like the PRUlink Investor above, this plan offers you life insurance coverage of 125% of your premium or the total value of your units from a minimum of RM 5000. You are able to invest in the global funds of your choosing from a minimum single premium amount of RM 4000.
Making Payments to your Prudential Account
You can choose to either be making regular monthly payments or a single payment. For regular payment, you can make monthly payments from a minimum of £20 and you or at least one of you (for a joint account) should be under the age of 80 years when you register the account. For single payments, you are able to make one or more single payments from a minimum of £300. You can switch from single to regular payments and vice versa any time you want.
You can pay through pay on phone, online payment, ATMs and Credit cards (for renewal payment). Contact Prudential official website for more information.
Stopping or Reducing your Premium
You can reduce your regular premium amount or take a break from paying your premium at any time and still be able to have your bonuses and benefit deposited in your account. This will, however, affect your account and reduce the amount that you will get after maturity of your policy.
You have an option to:
- Stop paying the premium but not cash in your policy. In this case, you can start paying at a later date through regular or one-off payment. This is subject to certain conditions.
- Reduce your regular premium to the one you can afford.
Withdrawal of Funds from your Prudential Savings Account
There are two ways that you can access your money from your Prudential Savings without having to cash in your entire savings.
- If you invested a single payment, you can opt to take a regular withdrawal from your account.
- Every withdrawal should at least be £50
- You may have to pay Income Tax on any profit you make when you cash in the policy
- You are not able to make regular withdrawals from your account while you are still paying regular savings
- Market Value Reduction may be applied on your withdrawals which will reduce the value of each unit you cash in thereby lowering the value of your account.
- Every withdrawal will lower the value of your account
- The minimum amount you can withdraw is £200
- Your account should remain with a minimum balance of £1000
- A market value reduction may also be applied therefore reducing the value of your account.
What you will get back.
If you do decide to cash in your account, you will get back the value of your bond which has no guaranteed amount. The amount you will get will be determined by the following factors:
- The amount that will have been paid into your bond
- How long each amount of money had been invested
- The bonuses and benefits that will be added
- The amount and timing of charges that will have been taken
- If you have taken any withdrawals
- Market Value Reduction amount that will have been applied to the value of your bond
What happens to your Prudential Savings if you die or become critically ill?
In the unfortunate event of your death or if you become terminally ill, Prudential Assurance has an obligation to pay out at least 101% of the value of your account. A terminal illness, in this case, means that you are expected to die within 12 months after being diagnosed.
If you have a single life account, the payment will be done when you die or are diagnosed with a terminal illness. On the other hand, if you have a joint life account, the account is passed on to the surviving policyholder and payment will be done only after the second person dies or becomes terminally ill.
Cancellation of Policy
If you change your mind about taking the policy and decide to cancel it, we recommend that you do so within 30 days in order to get back all your money. Cancellations done after 30 days will incur several charges and therefore you will not be able to get all your money back.
When your application is accepted, you will receive a cancellation notice which you can fill in and send back to the company if you want to cancel. Where a policy is held in joint names, any of the policyholders can cancel the policy.
Benefits of Having a Prudential Savings Account
When you have a savings account at Prudential, you will be able to enjoy the following benefits:
- You are able to get Critical illness/temporary life insurance coverage
- You are able to withdraw your money anytime you want. You may, however, incur some charges and a Market Value Reduction on certain withdrawals.
- If you encounter some financial difficulties, you are able to adjust your premium amount to the one you can afford. You are also allowed to switch between funds depending on your risk appetite.
- You can access and view the latest With-Profit Bonus Declaration
- You get smooth returns from your investments
- You enjoy some basic tax relief from your profits.
Risks of having a Prudential Savings Account
- The value of your account can increase or decrease at any time and is therefore not guaranteed.
- There are several charges which you may incur when you cash in your account.
- If you top up your account and then cancel after 30 days, you will not get your full refund
- Tax rules change may change at any time
- If the charges you incur are more than the overall growth of your investment, you value of your plan will reduce to even less than you had invested.
Important Terms that You Should Know
Allocation rate: – is the percentage applied to your payments before the charge is deducted and the rest of the money invested. This rate changes from time to time and is therefore not guaranteed.
Market Value Reduction (MVR):- refers to the deduction that is made whenever you withdraw from With-Profit Funds. It is meant to protect investors who are not withdrawing by making sure that every investor gets a fair return from their With-Profit Funds.
Initial charge: – this is a 6% charge that is deducted from every regular or single payment you make to your account.
Annual charge: – this is the charge that is deducted from your account every year