Excessive spending on credit is the No 1 cause of bankrupcy in Singapore.
4 in 5 young people roll over their credits monthly, and pay interest of up to 24% per year. If late payment and other charges are added, they may be paying up to 30%.
For a credit of $5,000, the charges can be as high as $1,500.
There is a better way. Take a loan from the cash value of your policy, and pay interest at only 5.5% per year. You can save up to $1,200 on a credit of $5,000.
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this is not possible based on the fact that it presents a loophole to be exploited by people who wants to use their CPF before they reach 55yr.
ReplyDeleteIn this scenario, as suggested by terence, NTUC income becomes an agent who charges 5.5% PA for helping you to do a premature draw on your CPF.
The ability to pay back the loan using the policy is not of material. This is because when you loan from a CPF policy, you are actually already drawing your CPF. The loan term is just a vehicle to allow for early withdrawal.
songvios@yahoo.com.sg
this is not possible based on the fact that it presents a loophole to be exploited by people who wants to use their CPF before they reach 55yr.
ReplyDeleteIn this scenario, as suggested by terence, NTUC income becomes an agent who charges 5.5% PA for helping you to do a premature draw on your CPF.
The ability to pay back the loan using the policy is not of material. This is because when you loan from a CPF policy, you are actually already drawing your CPF. The loan term is just a vehicle to allow for early withdrawal.
songvios@yahoo.com.sg
It may be possible to take a loan, if the investor undertakes not to surrender the single premium policy before age 55.
ReplyDeleteAfter age 55, the CPF allows the savings to be withdrawn and this can be used to repay the loan.
Hey Anonymous,
ReplyDeleteThat's sound great. After the age of 55, then the remaining CPF amount can be used to repay the loan.
Hmm...but when you loan, you are actually taking out your CPF investment money in your policy to use first, once it drain off. You need to top back when you surrender the policy. Believe that, your CPF must be sufficient if your outstanding loan is high, in order to repay back. Else what is the other alternative?
NTUC Income will be promoting our policy loan more actively. We charge interest at 5.5% per annum only. This is much lower than interest charged from other sources, such as credit card, etc.
ReplyDeleteWe will explore if it is possible to grant a loan against a policy taken with CPF savings, provided that the policyholder undertake to keep the policy with us until age 55.
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