Sunday, July 13, 2008

Existing Life Insurance Policies

Some people asked for my advice on whether they should continue their existing life insurance policies, or should terminate them and buy a term insurance policy.

Here are the general rules of thumb:

1. If the policies have been in force for more than 2 years, you should continue the policies as most of the upfront charges have already been incurred.

2. If the policies are taken for less than 6 months, it is generally advisable to terminate the policies and take a loss. However, you should buy a term insurance policy first.

3. You should avoid buying a new whole life, endowment or investment-linked policy as the charges are too high. It is better to buy term insurance for your insurance protection and to invest in a low cost investment fund.

Read this FAQ:
http://www.tankinlian.com/faq/savings.html
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1 comment:

zhummmeng said...

I would advise terminating the wholelife or endowment if it is a strain on your finance and if you find that your are committing too much in insurance and yet you are not adequately covered. Remember you have other needs too. The most ideal situation is all your urgent and important needs are taken care of first and adequately. Allocate your resources efficeintly and where it is most needed. If whole life takes a lot out of your resources and not providing enough coverage it must be corrected even if you have to terminate it and take losses.
Buying term and invest the rest can also help in recouping the losses because the return from your investment is usually much higher than wholelife or endowment.
So I advocate canceling the whole life and endowment plans even you are already having cash value. Don't drag. Bear the pain and look at the big picture, ie.that you have adequate insurance with term plans and other needs met and that is what you really need.This is the peace of mind you want, right? and Not making some insurance salesmen rich and meeting their needs.

July 13, 2008 10:20 PM

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