I read your view that it is not necessary for a poly student to buy insurance for saving. My friend, who is an agent, told me that I should save early and pay a lower premium. He said that if I do not save, I will spend away the money. Who should I listen to?
REPLY
As you are not working to earn a regular income, you should avoid making any commitment to make fixed saving in an insurance policy. You should save your money in a flexible saving account which can be withdrawn at any time, without any penalty, to meet emergency needs.
A life insurance policy is the worst type of saving plan for a student or any person with irregular income. Up to two years of your savings is taken away from you as "distribution cost". This is your earned earned savings, which you earn from part time work or from the allowance given by your parent. Why should you give it away to the insurance agent or company as distribution cost?
Many students find it a burden to continue the fixed commitment and give up their insurance policy, leading to the forfeiture of their savings.
It is wrong for the insurance agent to sell a fixed saving plan to a student who does not have a regular income. The agent is only thinking of earning the commission from the sale - without thinking about the financial burden that is being given to the student.
My comment applies to university undergraduates as well.
Tan Kin Lian
Tan Kin Lian
Yes, it is true that premium for a young person is low but this is only half truth becuase insurance agents NEVER tell you that the cost of insurance will increase with age.The premium has 2 components, the mortality cost and the surplus premium which will form your cash value but will be reduced over time.
ReplyDeleteThe mortality cost(MC) and surplus are inversely related, ie as MC goes up the surplus goes down and by the time when you are 60 years old the MC will overtake the surplus, ie. your MC will be more than your premium and the difference is taken from the cash value which will be reduced as you grow older and the rate of return will be reduced too.At this point NONE of your premium goes into saving and most people will terminate their policy. So what is wholelife policy when you are disadvantaged at old age.
Another point is the Mortality Cost is the same for a young person and a old man when they reach the same age regardless of when the policy is taken up.
Insurance agents lie to you on this part.
As always said, insurance agents are salesmen and are never truthful. They are only interested to sell you something to make a commission. Your interest is NEVER at the heart of the sale. You can see they lie to make a living and disregard your financial circumstances as a poly student.
If your friend is honest he or she should counsel you and not CON SELL you.
The Watchman
As a poly student (I am assuming you don't have stable income other than support provided by your parents/siblings), the only products you should consider to buy now is low cost protection based products such as: Personal Accident Cover (say S$100,000 or S$200,000 Sum Assured. This should cost less than S$180 premium per year for every S$100,000 PA cover for you - full time student);
ReplyDeletenext level, you should have either MediShield (if you're Singaporean or SPR) or get a Private Shield cover such as IncomeShield, should cost less than S$100 for your age.
If you have more budget, you can go on to buy a 10 to 30 years Non-Profit Term Assurance (covering Death & TPD for whatever reasons... if have higher budget, then opt to cover Critical Illness) of S$50,000 to S$100,000. It should cost less than S$400 per year for S$100,000 Term Assurance cover for your age for a 30 years' term assurance. Please check with your agent.
These products are low cost protection based products and most people should only buy these type of insurance product especially in their early working life.
To learn more about these products, you can either visit the following website or ask your insurance agent for their opinions directly:
http://tankinlian.blogspot.com/search/label/Insurance
good luck~
Giap.
p/s: after you've completed your study and secured a job, you can consider other products containing 'savings' element - such as Education Endowment plan to fund part of your children education.
or 'with-profit' cover or unit-linked products or ETF to save for longer term.
or Regular Premium Deferred Annuity to partial fund for your retirement.
No good don't buy lah! They don't put a knife to your neck do they?
ReplyDeleteYou know the meaning of con or not. If they put a knife , at least I know it is rotten product. But they cheated me.
ReplyDeleteI don't know the meaning of con. If you are that smart, why are you conned or cheated?
ReplyDeleteI am not smart that is why I am conned and conned by people like you insurance agents. If you put a knife to my throat I can be careful the next time. But becuase you don't know the meaning of con that is why you need a knife to put to your throat.That is even dumb.
ReplyDelete