Annuity Plan

In recent months, "T" company launched a plan that works like an annuity plan, even though the plan name does not suggest.

What is it about:
In plain words, i.e less the jargons, the policy holder pays $XXX.XX (monthly or yearly) for XX number of years, upon age 65, gets 4% of sum assured for the rest of the policy holder's life (100 years, 120 years, 150 years maybe? Nothing is impossible)

Example, if sum assured is $100k, then the payout (from age 65 onwards) is $4k every year after year.....

I generated 3 quotes (15,20,25 years limited payment term) based on the following profile:-
Name: Mr M.
Age: 35
Non-smoker
Sum Assured: $100k (Protection: D/TPD) (No DD coverage)
Assuming Mr M lives til age 100, he will get $4k per year from age 65 onwards

This is what I get (See image below for a pictorial representation):-
15 years: pay $3035 per year (IRR = 2.98%)
20 years: pay 2592 per year (IRR = 2.8%)
25 years: pay $2362 per year (IRR = 2.6%)
IRR means Internal Rate of Return. The IRRs are rather ok (considering that this is relatively low risk compared to funds); 20 or 25 years plan would be considered if Mr M has a budget constraint or would like to channel more money towards BTITR.

click image to enlarge

So, what can this plan be of use to anyone?
1) Position it as the "predictable cashflow" portion of your retirement plan;
2) Complement it with a BTITR (BTITR supposedly should generate higher returns than this annuity plan, but lacks the predictability feature).

Therefore, if Mr M uses this annuity plan with BTITR, he gets:-
a) A guaranteed annual amount of $4k (forever, well, literally);
b) A higher amount from BTITR portfolio that can be withdrawn on a monthly/annual basis.

Also, note that I did not include Dread Disease coverage for the annuity plan, as I think it is not worthwhile (costly).

Feel free to contact waynekohwg@gmail.com for details and clarifications.