Tan Kin Lian's Blog: Several living policies

Friday, August 31, 2007

Several living policies

Question:

I presently have a few living policies paying about $2,000 yearly for each policy. Should I terminate them and convert them to term insurance policies?

REPLY:

You have probably over-invested in the living policy. It has high charges and give a low return, as a large part of the premium goes towards the critical illness coverage.

You should have more of your savings to earn a high return for your retirement. You can buy decreasing term insurance for your protection. A sum insured of $50,000 is probably adequate to provide for critical illness.

5 comments:

Thomas Phua's Blog said...: $50,000 may not be enough in event of a dread disease.

If one is down with cancer, and if not too serious, can still continue to work, but most case will end up being boarded out of job, if serious enough.

Other than taking care of living expenses and medical fees , if one has a family, $50,000 is simply not enough.

One has to look into individual need to understand if $50,000 is enough protection.

One can combine a Living Rider to boost the coverage for critical illness plan.

- Thomas Phua; August 31, 2007 10:41 PM
Anonymous said...: Dear Mr Thomas,

May you describe in more detail how do you boost coverage by combining a Living Rider with critical illness plan?

Thank you for your help.; September 01, 2007 3:40 PM
Anonymous said...: One ex-CEO of income says $50,000 money is enough.

One current income agent says $50,000 money not enough

so ... is having $50,000 enough or not enough?

i-not-rich; September 02, 2007 1:29 AM
Khiat Han Hwee Adrian said...: This posting talks about Whole Life Policies. Too much Whole Life policies are not necessary and generally $50k is ok.
The keyword is "Whole Life"

It does not imply that $50k coverage for Critical Illnesses is enough.

$50,000 Critical Illnesses Coverage in my opinion is not enough for a average earner in Singapore. We should complement the life policy with term policies or riders for Critical Illnesses upto 3-5 times our annual income.; September 04, 2007 2:30 AM
Thomas Phua's Blog said...: What is enough, depend alot on a person's profile. Single, married, with children, etc.

Basically, it depend on how bad the illness is. Most cancers, some will die in short time, some will go into remission. Heart attack may not kill the person, but may render one to be less active and not suitable for too stressful job.

Heart attack patient can live many more years in today's medical advance.

What we are more concern is those that is more serious that will have one incurable and die on 2 to 5 years.

So if one is not able to work, how will he support himself? If his family needs $30k a year than a simple calculation will tell us, he needs $150,000 coverage besides other medical H&S plans like Shield Plans.

And if he dies, how much is needed to take care of the family forward?

With these few needs, one should be able to work out rough how much protection to take.

Living Rider is basically a rider, like term but has critical illness coverage as well.

- Thomas Phua; September 10, 2007 9:58 PM