Money 8 Secure is a life insurance product coupled with guaranteed cash payouts plus dividends offered by BDO Life, the insurance arm of BDO Unibank, Inc. You pay a fixed amount for 8 years (thus Money 8) and in return, you get a life insurance coverage + fixed income given every 2 years until the 18th year + a lump sum on the 20th year (which is the maturity date of the policy) + a variable dividend based on fund performance. This is like an endowment insurance plan and according to BDO employee, this is policy is really hot selling.
Let’s look at the details.
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The proposal presented requires me to pay P50,000 (A) every year for 8 years. I get a fixed income (B) of P15,252 paid every 2 years until year 18 and in the 20th year, I get a lump sum of P326,022 + a variable dividend which assuming 4.5% dividend rate (F) will amount to P119,782.
To illustrate:
I pay P50,000 x 8 years = P400,000
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and what I get back is…
P15,252 x 9 times = P139,725 + P326,022 (lump sum on the 20th year) + 119,220 (@4.5% Variable Dividend Accumulation Rate on the 20th year) = P584,967
If you don’t use the death benefit (if you don’t die) within 20 years, your money will earn P184,967 in 20 years. (Note that the Variable Dividend Accumulation Rate is not fixed. If the fund performance is only 2.0% (I), the yield will be P97,779 only instead of P119,220).
The total death benefit “Basic Death Benefit” (C) + Accumulated Dividend (F). So if the policyholder dies after 10 years, he gets P388,122 + P33,462 = P421,584.
As a Life Insurance Product
Looking at it as life insurance, it is not very attractive as you can avail of similar products with other life insurance companies with the same P50k annual premium but with higher death benefits (over P1 million) even in the first year. With Money 8 Secure, you will only get a P194,051 death benefit in the first year.
As an Investment
Looking at this policy as an investment tool, assuming the principal is paid at year 1 (for simplicity) and assuming you don’t die within 20 years, the effective interest rate is approximately 1.918% per annum. You can get higher interest rates in money market funds, bond funds, UITF, mutual funds, and online-only banks such as ING and CIMB. Since your timeline is 20 years (a long way to go), you can even afford to place it on riskier investment vehicles such as equity funds.
If you are attracted to the regular fixed amount remitted directly to your BDO account, and if you think P15k every 2 years is enough, then go ahead and consider this policy.
Summary
If you have the money you intend to just keep in a time-deposit account for 20 years, then this can be a good alternative for you. At least you are getting life insurance from it. If you are thinking that the regular payout of P15k can also be re-invested in other investment vehicles to grow additional income, then Money 8 Secure is for you. If you simply do not have the discipline to save, consider Money 8 Secure and force yourself to save 50k a year. At least, your money will go somewhere.
You can avail of BDO Life Money 8 Secure at your nearest BDO branch.
For everything else, if you are after the fixed-income or the life insurance or the investment part, there are other alternatives that will give you more value for your money.
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