By: Tan Kin Lian Catherine Choong posted a detailed posting on Vivolife (i.e. whole life policy with premiums paid for 20 years) in The Online Citizen. She pointed out several benefits of the policy, (which I accept). The main drawback of the policy, in my view, is the somewhat low return to the policyholder at the end of 20 years. A few weeks ago, a policyholder asked my advice on three Vivolife policies that he bought for his family. I calculated the return on the policies as follows:

  1.      2.       3.       4.        5.        6.     7.   8.
Policy  Premium  Accum   Expected  Cash Value  Gain    %  Taken
        20 yrs    @4.5%   gain      20 yrs     in CV       away
Self    $29,080  $47,666  $18,586   $34,907   $5,827  31%  69%
Wife    $24,340  $39,890  $15,550   $29,478   $5,138  33%  67%
Son     $23,420  $38,389  $15,969   $30,234   $6,814  42%  58%

The total premium paid for 20 years is shown in (2). If the premium is invested to earn a net yield of 4.5%, the accumulated amount is shown in (3). The expected gain is shown in (4). The cash value of the policy (based on a gross yield of 5.25%) is shown in (5). The gain in cash value is shown in (6). Read more... Related Articles Vivolife - Market Comparison