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Quantum - Short term funding

For various reasons, not all clients can commit to a long term savings programme to pay for their children’s education. For these clients, a short term funding option could be the solution.

Mr and Mrs Chen both aged 30 live in the Far East and have one daughter aged 2. Mr Chen is a successful IT Consultant and Mrs Chen is an architect working from home. Mr Chen has just won a lucrative five year contract and in agreement with his wife has decided that he should put aside a portion of this income towards his daughter’s future education.


Mr Chen contacts his adviser to discuss the options available. He only wants to commit to saving for the period of his five year contract but is happy to save USD4,000 per month. Mrs Chen has also stated that she would like to contribute from her income but cannot commit to a regular savings schedule as her income can be sporadic.


Taking all the clients comments into account, their adviser recommends that they start a Quantum savings policy with a monthly premium of USD4,000 and a premium payment term of five years. Once the savings term is complete, Mr and Mrs Chen can leave the funds invested until their daughter begins her secondary education. Mr and Mrs Chen's adviser informs them that they also have the option to invest additional single premiums at any time, so Mrs Chen would also have the opportunity to contribute if her circumstances allowed her to.


Their adviser produces an illustration for Mr and Mrs Chen to show them the potential fund values that could be achieved based on a five year premium term of USD4,000 per month:


Year
Total premium paid USD
Estimated policy value assuming growth of 5% per year USD
1 48,000 47,600
2 96,000 95,100
3 144,000 144,000
4 192,000 196,000
5 240,000 251,000
6 240,000 264,000
7 240,000 277,000
8 240,000 290,000
9 240,000 305,000

The results prodcuced show that Mr and Mrs Chen could build a potential fund of over USD300,000 to help fund their daughter's secondary education.


The figures shown in the table above are only examples and are not guaranteed.


The 5% per year assumed growth rate shown is after the deduction of the contract charge and any external fund management charges.