Dear Mr Tan,
I've been reading your blog for more than a year and have thoroughly enjoyed it. Can you help me with the following queries.
1) I bought a Living policy for my daughter 4 years ago. I have read your articles which encourage investment in large, low cost fund. I am thinking of terminating the living policy and using the surrender value to invest in NTUC Income's Flexi-Link plan. I guess the better, long term return should exceed the loss of about $1,000 loss on surrendering the living policy. Appreciate your advice.
Reply: I agree with you. It is probably better to make the switch and get a better long term return. However, the stockmarket is still quite volatile. Perhaps you can wait until it stabilises before you make this change?
2) My husband also bought two endowment policies some 10 years ago and he has been using his CPF fund to pay for the yearly premiums. With the new CPF changes, I read that members can continue to service their regular premium insurance policies but NOT recurring single premium insurance policies even if their CPF balance falls below $20,000. May I know whether the yearly premiums for my husband's policies are considered as regular or recurring single premiums?
Reply: An endowment policy is considered as regular premium. So, your husband should be able to continue to get the annual premium paid through CPF.
A lot of people put the cart in front of the horse when it comes to life insurance. They buy insurance for their kids but under insured themselves. Kids don't need life insurance except a medical insurance.
ReplyDeleteIt is often insurance agents' idea that kids be given a head start.This doesn't make financial sense.Even if the parents are already adequately covered it doesn't mean they have to squander their money on the kids. The money could be used for other needs like retirement which is important. This is how you should look at from financial planning point of view and not from insurance agents' point of view which often is motivated by personal interest.
Your kid doesn't need the living policy. Buy her a medical H&S plan, either from CPF or a private shield.Don't listen to the insurance agents' crap about buying the child's insurability. Insurance is about your needs NOW and not some future need which may or may not arise. Just look for a qualified adviser to help you