Tan Kin Lian's Blog: Term insurance rates are fixed

Tuesday, February 12, 2008

Term insurance rates are fixed

Dear Mr. Tan,

Question 1: Term insurance are designed to disappear as we grow older. Term insurance rates are often non guaranteed, the rates will be reviewed on a annual or a 5-yearly basis. The premium increases as we grow older. Is this correct?

Reply: You can buy a Term insurance with the rate fixed for 30 years. Read this FAQ:
http://www.tankinlian.com/faq/choice.html

Question 2: In comparison with a limited payment (maybe 20 year) whole life insurance policy, the coverage may start small, and because of it's contractual base, premiums remains constant. And sum assured increases with age (due to addition of bonus). When death occurs, the life plan will pay the full sum.

Reply: The return from a limited payment whole life is poor. This is due to the high charges deducted to pay agent's commission, expenses and profit for the insurance company. Some examples are given in my blog.

It is better to invest your savings in a separate investment fund. Read this FAQ:
http://www.tankinlian.com/faq/savings.html

2 comments:

Anonymous said...: The one disadvantage and the most disadvantage of whole life is that you never have enough coverage and that is what you need. If you think that you don't need to cover adequately your needs you might as well don't buy insurance now and wait until you come to your senses that insurance is to protect your loved ones and also becuase
you think nothing will happen when you don't have enough, right? You cannot postpone buying all your insurance when you need it. But insurance agents like to tell you that you buy when you have budget. This is a dangerous advice. Why insurance agents give you this kind of dangerous advice because they want to sell wholelife with high commission and this is to make sure you have a shortfall all the time so that they can sell you a wholelife all the time. If you cover enough with term they have nothing to sell you later. Does it make sense to you that insurance agents have this wicked plan?
Another myth is that whole life protection will increase over time. It is completely RUBBISH.It is another lie that agents will tell you.
Take the total protection value and minus your cash value and this is actual protection you are getting from the insurer..Don't count your bonus, this is added to cash value.
So, don''t be fooled when the agents say your protection will increase.
Another myth is you need insurance for whole life. You don't need!!!!When your responsiblity to your dependents is over you can cancel your insurance.Remember insurance is NOT FREE.You pay.
Check what i have said.
The most important thing is to have enough insurance and this is the whole idea why you buy to provide for your dependents when you not around and not to let the agents earn enough commission or to motivate them to sell.
Get a good and honest adviser so that you don't have this conflict of interest.; February 12, 2008 9:54 AM
Anonymous said...: I agree, it is a misconception the sum assured will increase. Either the agents are ignorant or they don't want you to know that in most cases the sum assured IS ACTUALLY DECREASING. But insurance agents pretend and tell you rubbish if you buy a whole life that the sum assured will increase as vis a vis a term. The truth is term remains constant,ie. it will not go up or down.
Ask your insurance agents and screw him or her with this question. I bet they don't know. How can your adviser don't know? Are they holding back a lot of information from you? Are they misrepresenting to you? or are you simply too lazy to want to know your future?
How can you have an 'adviser" who is not qualified and and honest and you are willing to leave your future in his or her hand?
It is time to examine yourself and shrug off your impression of those insurance agents out there. Do your due diligence.You will not be hurt. Buying insurance products is a long term commitment.

Zhumeng:); February 16, 2008 8:27 PM