Lately, insurance savings accounts/policies have increased in popularity as banks are slashing interest rates on their flagship high interest rate savings accounts. Heartland Boy blogged that he had also unabashedly jumped onto the bandwagon by parking a total of $30,000 with Singlife and Dash EasyEarn. The next exciting product in line under his consideration would be Etiqa Elastiq, which offers guaranteed 1.8% p.a. for the first 3 years. Here is Heartland Boy’s review of Etiqa Elastiq, an insurance savings plan by tiq.
Guaranteed 1.8% For First 3 Years On Your Initial Premium
What caught Heartland Boy’s attention is that the initial premium, capped at a maximum of $50,000, is eligible to earn a guaranteed interest rate of 1.8%. This interest rate is guaranteed for only the first 3 years, which is more than a sufficient amount of time for Heartland Boy’s consideration.
Additionally, should no withdrawal be made (include premium + top-ups) from the account at the end of 3 years, an additional (non-guaranteed) loyalty bonus will be credited. As at the time of this article, this loyalty bonus is equivalent to 0.3% of the average monthly account value for the past 36 policy months. To sum up, if no withdrawal is made at the end of 3 years, the interest rate would be a total of 5.8% over 3 years or an 1.9% p.a. as shown in Diagram 1.
The good news is that this total return excludes the sign-up gifts thrown in by PolicyPal. Heartland Boy would illustrate later how your returns can be juiced up to as high as 1.95%* by signing up for Etiqa Elastiq during this limited time promotion period.
Some Restrictions on Top Ups And Withdrawals
Some restrictions do apply for top-ups and withdrawals but there is still way more flexibility compared to traditional fixed deposits.
For top-ups, do note that:
- Amount for each top-up must be at least S$500 and in multiples of S$500,
- Maximum aggregate of top-ups and premium cannot exceed S$200,000 and
- Crediting interest rate for top-ups will be determined based on prevailing market conditions, which at the time of writing is also 1.8%
Since interest is calculated based on the daily account value and credited at the end of each policy month, it helps to top-up as soon as possible when one has accumulated the cash to set aside.
For withdrawals, do note that:
- First withdrawal must be made at the earliest 90 calendar days after Policy issue date,
- Amount for each withdrawal must be at least S$500 and in multiples of S$500 and
- Average daily Account value for the month must be at least S$5,000 for waiver of service fee (S$5)
Additionally, Heartland Boy would like to highlight this clause found in the terms and conditions governing Dash EasyEarn – “We reserve the right to delay the payment of the partial withdrawal amount/surrender value for up to a period of 6 months from the date of your surrender request.” The same clause is also found in other Etiqa products such as Dash EasyEarn, so Heartland Boy treats this as their legal counsels being diligent and adding more buffer for their company. In other words, kiasu but it is something Heartland Boy can accept.
This is marketed as an insurance savings plan because it is actually a universal life plan. It does come with more limited coverage compared to traditional life plans. In the event of death, the policy pays out 106.8% of the account value. However, do note that usual exclusions such as death from suicide within first 12 months, death due to pre-existing conditions etc will apply. Note that Elastiq by Etiqa is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corp (SDIC)
How To Sign Up For Etiqa Elastiq (Limited Time Promotion*)
To maximise your benefits from Etiqa Elastiq, simply sign up via PolicyPal using the promo code of “heartlandboy” Readers would receive tiered cash rebates and vouchers from PolicyPal as shown in Diagram 3.
Upon successfully signing up for Etiqa Elastiq with the promo code**, PolicyPal would contact you with regards to your cash rebate after the free-look period is over. You can choose either PayNow or bank transfer to receive your cash rebate varying from $10 to $30. Additionally, those who sign up with an initial premium of $50,000 are eligible to receive $55 worth of CapitaLand vouchers which will be mailed to them within 4 weeks.
For simplicity, let’s consider the PolicyPal credits as an additional bonus since it is difficult to quantify a dollar value to it.
Because of how the cash rebates and vouchers are rewarded, depositing $50,000 as the initial single premium easily represents the best value for money. Provided conditions are met, this enables the Policy Owner to be eligible for the guaranteed interest rate, the loyalty bonus, as well as all the sign-up gifts from PolicyPal. Under such circumstances, the total interest rate for a $50,000 initial premium is a total of 5.97% over 3 years or 1.95%* p.a. on a compounded basis. Refer to Diagram 5 for the breakdown.
Even if policy holder does partial withdrawal and becomes ineligible for the loyalty bonus, the effective interest rate is still a remarkable 1.85 p.a.%. Therefore, we can treat this as a high-yield savings account providing guaranteed 1.85% p.a. for 3 years![Update on 8 Oct 2020: Note that applications for Elastiq have closed. There is an even better product by Etiqa known as GIGANTIQ. Check out my review of GIGANTIQ and how you can earn 2% interest rate on your first $10,000)
* 1.95% is Heartland Boy’s own interpretation as it includes all sign-up gifts, loyalty bonus(non-guaranteed), and the interest rate crediting rate (guaranteed for 3 years) provided that the eligible conditions are met. This limited time promotion ends at 16 Aug 2359h.
**Note that this article contains referral links that goes to maintain the sustainability of this blog.
Disclosure: This article is meant purely for informational purposes and should not be construed as financial advice. For customised advice on your financial needs, you should seek advice from a licensed representative. It has not been reviewed by MAS. Information is correct as at 19 July 2020