Tan Kin Lian's Blog: Term to 65

Monday, December 03, 2007

Term to 65

Mr. Tan

You have advised people to buy Term policy rather than Whole Life policy. I am 47 yrs old and have a Whole life policy covering $60,000. I wish to increase it to $100,000. I prefer Whole Life as the Term policy will not cover after 65 yrs old. Is my concern valid ?

MY RESPONSE:
Can you tell me the following?

HIS REPLY

Mr Tan
My feedback is as below.

1. Do you expect to work full time and earn the normal salary beyond age 65? No
2. What are you likely to retire from full time work? Latest, at 65
3. When will all of your children be independent of you? They will be independent when I reach 60

Life insurance is needed to provide protection against loss of income in the event of premature death. Do you have a need for this protection beyond 65? Probably not

Some people buy whole life insurance to provide funds to pay estate duty. Do you fall in this category? No

Seems like I don't need Whole life policy, but a Term will do. I should invest the balance in a saving / investing product?

5 comments:

Priyadi said...: many people (agents included) often misled to think that life insurance is sold to protect against the risk of death. it is certainly not because insurance company is not yet able to replace our lost lives. life insurance is sold, and should only be bought to protect against the risk of loss of income.

we all always shoulder the risk of death, the elder carries higher risk than the young. however, not all of us carries the risk of loss of income. if we already have sufficient saving we don't need life insurance. if we don't have the income in the first place, then we don't need life insurance.

in my experience, sometimes it is frustratingly very hard to make someone understand this simple point.; December 03, 2007 8:37 PM
Anonymous said...: You don't need insurance beyond 60.If you have no dependants your death does not affect anyone financially, only emotionally. It is waste of money becuase insurance is not free.
The only one affected is your insurance agent. He cannot sell you a cash value product which carries high commission.He doesn't make much with term but it is fantastic for you. You can save the money for your retirement and money is needed here and not in the insurance salesman's pocket.
Mister, perhaps, this is the signal to you that you should be looking for a new adviser and not another salesman.; December 03, 2007 8:54 PM
Anonymous said...: That is the misconception and customers are made to believe by agents that insurance can protect against the happening of that event.This gives a false sense of security.
Insurance is used to protect what you have or what you are worth. Eg. Critical illness insurance is used to protect your asset or someone else's from being devastated by a calamity or an income replacement insurance(term or wholelife against death or disability) is to protect the loss of earning that the dependants depend on.
However, salesmen depend on this fear and misleading strategy to con the innocent and the unwary into buying.; December 03, 2007 10:50 PM
Anonymous said...: Mr. Tan,

I like your questions. They help the ordinary folks to understand what life insurance is for.

I hope that all insurance agents should honestly ask the right questions to determine the real needs of the customers (and not push products just to earn commission).

Maybe, the agents should be required to ask these types of questions.

Francis; December 04, 2007 10:00 AM
Anonymous said...: You can be sure the insurance salesmen will not ask you these questions because it will eventually
point to a term policy. So why shoot your own feet? The agents are not idiots. They are even cleverer to make you buy more instead of one by twisting you around. Asking those questions 'tan boh chiak'. Customers
die is their business.; December 04, 2007 9:08 PM