Hi, Mr. Tan,
This is a true story from my personal experience. I like to share with everyone visiting your blog.
My motivation of buying insurance came from a friend from X who told me how important insurance is. Since X's charge is quite high, I did not consider it at that time.
Later, I approached company Y. The advisor introduced to me the Limited Premium Living Policy and also the Life policy. He gave me a printed copy showing the cash value and sum assured. The Limited Premium policy gave me the option to stop paying premium after 20 years and enjoy whole life protection.
A friend mentioned Term insurance to me. I asked the advisor. He recommend against it, saying that coverage would only be up to 65 years and that I needed protection most after that. If I bought Term insurance and changed to a Life policy later, I would have to pay a higher cost. He made a calculation showing that term insurance was sunk cost, while Limited premium have a cash value and will breakeven after a few years. I almost decided to buy the Limited Premium policy.
One day I read WoBao, and learned about Mr. Tan's blog. Mr. Tan recommended the concept of "Buy term, invest the rest". It was really a new concept for me.
I emailed Mr. Tan and showed him the calculation made by the advisor. He replied within a few minutes. (Even a customer service officer would not be able to reply so fast to customer's enquiry. I did not expect the ex-CEO would be replying my email so fast.)
Mr. Tan told me the sum assured recommended by the advisor was too high and took away too much of my savings. I read his FAQ and learned how much more I could get by investing in an investment fund. Most importantly, I would have the flexiblity in investing my money.
Mr. Tan suggested that I should contact a few more agents to gain more insight. Considering this is a long term commitment, I started to call back some agents introduced by my friends, think that they would be more trustful.
The agents were only interested to sell Investment linked or Life policy. None of them talked about Term unless I asked about it. They all recommend against Term. If I had not read Mr. Tan's blog, I would have lose interest in Term.
I should thank Mr. Tan for your great blog. Later, I decided to go straight into Term. After this experience, I learnt that:
1> Do your comparison between different companies based on the same product. (e.g. it is easy to compare Term). Ask the agents lots of question since this is the money you will be locked for long time.
2> Once you have made up your mind, go to that product immediately. Do not waste your time listening to unrelated stuff.
3> Learn to search online. Read the forum to read comments from other people. Many comments showed that insurance product do not give their projected cash value after 20 years, and the customer's money has been locked up and depreciated.
I hope that this is useful to visitors of Mr. Tan's blog.
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