Friday, July 06, 2007

Premium for term insurance

Hi Mr Tan

I am 30 years old with a monthly income of $X. How much life insurance should I buy and what is the premium that I have to pay, if I buy a term insurance plan?

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REPLY

You can read this FAQ on choice of insurance plan. It also gives some examples of the premium rate payable. The premium varies proportionately to the sum insured.

You also have the choice to buy a decreasing term insurance, where you can save about 50% of the premium.

If you have a family, you should be insured for 5 to 10 years of your income. The premium should cost you less than 1% of your monthly income.
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3 comments:

Anonymous said...

Mr. Tan I like you. I realise you are promoting the concept of buying term
and invest the rest. You have taken it to the extreme by recommending decreasing term which is good especially for the poor.They are the people who need to stretch their money in order to be adequately covered. What do you think of limited premium type of plan? I think this is good for agents' pocket at the expense of clients' protection. Only the rich and high income earners can afford this type. Unfortunately the poor are also buying and soon they will become the victims of lapses.
The question of honesty is called in here.

July 06, 2007 1:39 PM
Thomas Phua's Blog said...

The poor are not as stupid as you think.

The Insuranced Advisor are not commissioned driven primarily if they stays long in this industry.

The poor do not insured themselves because of bread and butter issue.

It is those who loves their family who plans ahead.

Different types of plan fit different needs.

Do not harp on your poor knowledge of rich and poor and wholelife and term plans.

I have tried to plan for term with dread disease for a taxi driver who came to see me with his wife.

Budget is limited. I presented the term plan, but client wish to see some cash value, and I have to add a small sum of wholelife but add a higher rider to give the taxi driver a good coverage.

End of the day, people are not as stupid as you perceive them to be.

Have a clear understanding on what Wholelife can do for you on the latter part of life as well.

It is sad that those who are poor in knowledge tries to think their perception is rich.

- Thomas Phua

July 09, 2007 10:45 AM
Anonymous said...

The poor love their family but they have limited budget. What do you do ? recommend them a limited premium? a whole life? Look , how could they ever have enough coverage when a large of the premium goes to paying your com? No wonder they say the rich get richer the poor get poorer and the insurance agents are in the equation; help them to stay poor. That is the best you help them if you keep using 'buyer beware" approach.

July 09, 2007 8:29 PM

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