Hi Mr Tan,
I've been reading your website with interest recently, and I noticed that you do not believe in the need for life insurance after the age of 65. I understand your point of view that as the kids have probably grown up already and you are retired with your nest egg funds and no need for the coverage.
However, I have the following view. If I have already saved up enough money for my retirement without the need to surrender my life plan which I started at a young age (thus high coverage and cash value), wouldn't you think it would be better for the family to have that whole sum? I'm assuming life plans cover death up to age 99.
Example, I buy a whole life plan since I'm 21, with death coverage of $200,000. Upon age 65, cash value may be another $200,000. If I do not need the money, I could just leave it there, paying my insurance charges, and assuming I die age 70, my family will have sum assured $200,000 + cash value $200,000, therefore = $400,000 instead of me terminating the policy at age 65, withdraw the money and place in fixed deposits for the next 5 years until iIpass away at age 70?
Please correct me if I'm wrong in any of the assumptions I've made, but what I'm trying to say is that, leaving the money for my next generation through insurance may be another way to look at it instead of the simplistic approach of terminating all my policies once I reach age 65. It should all depends on individuals.
Thanks for your time, and hope to hear your point of view.
REPLY
Please read this blog and watch the video by Suzy Orman
http://tankinlian.blogspot.com/2008/08/susie-orman-on-life-insurance.html
As you have already taken a whole life policy, you can continue with it and leave the proceeds to your children, especially if you have sufficient money to meet your own needs. For young people who are not so well off, it is better to buy term insurance for 20 to 30 years, and invest their savings in a low cost investment fund.
Read this FAQ about continuing with an existing life policy:
http://www.tankinlian.com/faq/exist.html
Keeping a WL plan beyond 65 is no longer a need. Your need is better served by a medical H&S and self insurance.
ReplyDeleteIf you WANT to keep it for your next generation it is a WANT.
Not many people are fortunate to have 'wants" like you have because at retirement for most people money always 'no enough'.
This is only the legitimate goal I can think of for WL, a legacy ,the proceed to beneficiaries.
If you think of accumulating more cash value I am afraid you will be shocked to know that your cash value will DECREASE as you hold longer.. Since this is not your goal then hold for next generation.
Mr., I want you to know that WL is not an ideal plan as legacy.It is expensive, very expensive. Did you know that you can use term insurance which can cover till you are 100 years old? It is currently available from a few companies. Isn't it less expensive?
Of course if you should live more than 100 years old then WL is better, but at a very high price.
Better yet... ask your kids to pay the premiums for you after age 65. Afterall they will be the ones reaping the benefits henceforth ;)
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