Tan Kin Lian's Blog: Amount of Life Insurnace

Monday, May 10, 2010

Amount of Life Insurnace

This article explains the amount of life insruance that you need. In my book on financial planning, I suggest that the amount should be 5 to 10 years of your current income. You can buy a large amount of cover at a low cost by choosing term insurance for 25 years (not longer). If you can get decreasing term insurance, it is even cheaper.

Most people in Singapore can buy cheap term insurance through the SAF, SAFRA, NTUC or Public Officer's scheme.

Tan Kin Lian

3 comments:

Anonymous said...: It is not unusual insurance agents short change their clients' needs.
The reason is that they sell expensive products with high commission that the clients can afford only a little bit and inevitably falls short of what the clients need. It is also the agents' modus operandi to create short fall so that the agents can 'review' often. Review to the agents means selling another wholelife or endowment . Despite reveiw there is always a shortfall. This creates business for the agents perpetually.
Example: the client after a health check is found to need $500K of insurance to replace dependents' income upon death and $250K for critical illness.
You know what is recommended by the clever insurance agent?
Only $50K-$100K of wholelife or limited payment living policy and client is advised to top up in the next review when they have money. Reason of recommendation is cleint die die wants the living policy with return.Wonder who is the adviser and who die die wants the wholelife living policy?
If there was a fact find and need analysis it was just going through the motion for the sake of it or a charade because the insurance agent already knew what he or she wanted to sell. The whole charade was to make it look like a health check was conducted.
I am afraid when MAS makes it compulsory in the future a need analysis for all cases this fake fact finding will be the ruse of the agents and most likely also that it will be done as a post selling exercise, ie forms filled up after the sale.
Self regulation or internal control" It is sham and the company pays lip service only.The company's policy is so long no complain their eyes will be closed.
It doesn't care how the business is brought in , even the supervisor who vets and approves the cases closes his eyes so to meet his quota. I am sure MAS knows it.It is well known in the industry.But why MAS is not doing anything?; May 10, 2010 10:09 AM
lilian tan said...: Public Officer's scheme: it will mean i have to serve the govt in order to be covered under this scheme. which also means i cannot resign from my govt job.; May 10, 2010 11:19 AM
Anonymous said...: We can vent all we can through Mr Tan's blog.

It doesn't do anything to change the marketing strategies. It makes money for agents and their managers.. why in the world would they change?

Insurance is not a priority and only for those who can afford it. The very well off, the kweks, the lees, the wees.. they do not need insurance.. their assets are sufficient to cover any illness or disaster that can happen. They are probably more interested in having in place a succesor to carry on their journey of wealth and legacy.

Insurance is a luxury only the middle income group can afford.. and Singapore has a very large percentage of middle incomers.. thats why the Life Insurance Association ( LIA ) has reported astounding growth of the industry over the last few years.; May 10, 2010 12:06 PM