Sunday, July 08, 2007

My approach towards insurance

Mr Tan,

If annuity is so good, how much of it did you buy? Also, how much of regular-premium ILP did you buy? It'll be good to see an insurance expert walking the talk.

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REPLY:

When I was younger, I bought regular premium policies to provide the insurance protection and accumulate some savings. I also bought insurance for my children. I must have more than 10 policies at one stage. I bought the policies from NTUC Income, as the sales charges are modest (and not excessive).

I now have many investment linked policies, invested in the combined fund and the money market fund. They are also with NTUC Income. They are mostly invested with single premiums.

I advise young people to buy a regular premium ILP plan from NTUC Income - as the sales charges are lower than similar plans from the market. You can also buy directly from their business center, and enjoy some incentive.

For those who are able to buy unit trusts directly through the internet, you can do so directly, and save on the adviser fee. But, you have to be careful about the fund that you invest in. Make sure that you are not hit with higher annual fees.

As I have more than sufficient savings, I do not need to participate in the pooling of longevity risks in a life annuity. My savings, which is in the combined fund, will last more than my remaining lifespan. So, I do not have any life annuity at this time. (But, I may change my mind at a later date).
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2 comments:

Anonymous said...
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July 08, 2007 10:35 PM
Anonymous said...

Hi Mr Tan, thanks for sharing your insights in this blog. Your views are valuable for a young man like myself (I'm 23 by the way)

I'll wish to seek your thoughts in recommending ILPs to your visitors. For one, I think that they are expensive. I bought one whole life ILP this year (from Prudential), and it has a distribution cost of 20 months premium paid over 3 years. (I'm wondering now if I should opt out of the policy due to the high cost) Moreover, the funds to choose from are very limited as compared to what's available on the market, and some of the funds offered by the insurance companies are even offered to retail investors.

I'm doing my own investing for my retirement fund, and will think that with persevered learning, I will gain more doing my own investing (ie buy term and invest the rest of my savings)

Hope to hear from you soon.....

July 09, 2007 5:42 PM

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