Qualifying Deferred Annuity Policy

[martykay]

Has anybody looked into this yet? Participating companies are here - https://www.ia.org.hk/en/qualifying_...t_of_QDAP.html

Tax deduction on premiums up to 60,000 HKD per year.

I had a chat with Prudential with their plans called PRURetirement Deferred Annuity Plan. Without going into much details yet, from a nice scenario, if you pay premiums up to the 5th year and stop, you break even is at the 8th year (assuming guaranteed cash value follows their calculations)



If you're in the top tax bracket paying 17%, this means 17% * 5 years (premiums paid) / 8 years (break even) = 10.625% return. Basically get your tax dollars back in break even years.

Seems quite good if you ask me, has anyone had a detailed look at this?

[Kowloon72]

Does that table stop at 28 years or just switch to RMB?

[martykay]

All in USD and continues to Year 35 cash vaue = 0, as after Yr 15, the policy pays you a monthly amount until its 0. From the looks of it, it doesn't seem like a great policy, but its really the tax deduction that is making this look attractive.

[traineeinvestor]

It looks like a lousy investment to me. Expected return through to year 15 is about 3% pa with risk to the downside.

2800 currently has a yield of around 3.5% pa and, although I would expect some volatility, over time I would also expect the annual payout to increase generating higher yields on cost + capital gains.

Then there's the liquidity - 2800 can be sold (in whole or in part) any time you want.