Each year, you are guaranteed of a cash payout at 7.5% in Year 1, 5.75% in Year 2 and 5.75% in Year 3. However, if you intend to stay put in this plan for the entire 3 years, you might as well opt for the cash accummulattion option where you don’t receive the payouts every year, but only once when the plan matures. The benefit of doing so is that you will still earn the said returns annually, and they will be ploughed into your plan and you earn compounded interest on those returns too. This way, instead of earning the total of 19% when you add up the yearly payouts, you will earn slightly more at 20.22%.
You have the option to surrender the plan midway if you choose to do so. However, you will incur some fees and this will dilute your earnings somewhat. Ideally, you should keep this policy untouched for the entire tenure since it is a short-term plan.
To start, you need a minimum of A$8,000. This plan is ideal for parents who have already stashed away some money for their children to study abroad. It makes sense to put that money in this guaranteed vehicle and earn higher returns than any fixed deposits in the country. Having said that, I also have to caution you on the negative side of this plan – the foreign exchange risk. It will be perfect though if you are intending to send your children to Australia, and therefore not having to exchange the money back into Ringgit and risk losing out on worse-off rates.
If you are interested to know more, contact your AIA agent and ask for more details. I did just that and am now still thinking about whether I should buy the plan. What do you reckon?
{ 2 comments… read them below or add one }
Have you heard about Al Rajhi saving with d dividend account? They pay 0.5% monthly on your ending balance. That is about 7 – 8% annually. They don’t restrict to Bumiputra only. Check it out. I think this is better than 20% in 3 years.
Hi Reena, thanks for the info. That’s great news! I would prefer this option than to bear some forex risk. I’ve been looking at the bank’s website but haven’t been able to find it. If you know the name of the savings account, could you please share?