Here is a guide to measure if your life insurance policy gives good value to you.
Calculate the yield on the policy, using your annual premium and the cash value at the end of the premium payment period.
If you get a yield of 4% or higher, the policy gives good value. If it is lower than 3.5%, the policy does not give good value (i.e. high cost).
Here is the reasoning:
1. If you invest for 20 years or longer, you can get a return of 5% or more.
2. The yield on your life insurance policy is due to the expenses and the mortality cover.
3. A significant part of the reduction in yield is used to pay marketing expenses.
4. The reduction should not exceed 1.5%
If you buy Term insurance and invest the difference, you can get a net yield of more than 4%.
- ► 2013 (302)
- ► 2012 (1270)
- ► 2011 (1873)
- ► 2010 (2369)
- ► 2009 (1655)
02/10 - 02/17
- Subprime Crisis
- Invest in the Combined Fund
- Make regular savings in a low cost fund
- Intimidating letter from lawyer
- Identify the poisoned wine
- Selecting a unit trust
- Term insurance
- Yield of an investment
- Rent out your HDB flat
- Impact of inflation on financial planning
- Benchmark for Life Insurance Policy
- Risk Management & Insurance, SMU
- Sharp drop in AIG shares
- Visit to Jakarta
- Best terms for a car loan
- Term insurance rates are fixed
- Claim settlement service
- Loss control measures
- Useful functions of insurance
- Legal doctrines in insurance
- Investment Tips for a Retiree
- Personal Risks
- Whole life, premium payable for 25 years
- Avoid high cost plans
- Questions from a Young Person
- Lost a camera in a taxi
- Low cost index funds
- Decline in US Dollar
- Economics Joke: Recession and depression
- ▼ 02/10 - 02/17 (30)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)