Friday, May 09, 2008

Endowment or Limited Pay Whole Life?

Hi,
I've been approached to purchase an endowment policyand a limited pay whole life policy by two different financial advisers recently. My only policy is a whole life policy that covers me for $20,000. Please advise on the various factors that I should consider before purchasing either policy.

REPLY
I hope that this FAQ can help you in this decision:
http://www.tankinlian.com/faq/savings.html

My advice is to buy a Decreasing Term (or Level Term) and invest your savings in a low cost investment fund.
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3 comments:

Anonymous said...

Hi,

I also bought the limited life policy from NTUC and think that it was a bad move. I trusted my agent a lot when he said it was a good policy to buy as I knew nuts about insuarance, but I guess it was misplaced trust. Left in a limbo as to cancel or not.

Definitely going to heed Mr Tan's recommendations to buy decreasing term policies.

May 09, 2008 10:00 AM
Anonymous said...

You are grossly under insured. How on earth did the agent sell you so small a coverage. Obviously, it was conflict of interest. Luckily, nothing happened. If it did you had only $20K claim by yourself or by your family. Is the amount enough to take care of any concern?
Conflict of interest.: When your agent sold this $20K wholelife the commission he or she got was 40% of your annual premium.
The premium you paid for the $20K wholelife could easily get you few hundred thousands coverage. The agent's commission is only 10% of annual premium.

You see the difference?
You can see for yourself whether the agent was acting in your interest or in his or her interest.

May 09, 2008 12:19 PM
Khiat Han Hwee Adrian said...

Get your adviser to go through your existing insurance cover. Let him compile your coverage from all your policies based on
1) Medical
2) Premature Death
3) Permanent and Total Disability
4) Critical Illnesses

Then he should analyse for you in a proper fact-find form that specify on the above coverage.

There are many factors involved than just simple numbers. A skilled adviser is able to guide you through various scenerios.

May 10, 2008 1:39 AM

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