I started to read your blog recently and realised that I might be ripped off. Please see attached policy I brought 3 years ago. Am I right to say the effects of deduction is 51%? What your advice? Terminate after I can break even say after 4-5 years?
RW
REPLY
The effect of deduction at the end of 30 years is 35% compuated as follows:
- Total cash value (including non guaranteed): $53935 65%
- Effect of deduction $29132 35%
- Accumulated premium $83067 100%
To decide whether to continue or cancel the policy is a difficult question. Read my FAQ on "existing insurance policy" in my blog. Or read my book, Practical Guide on Financial Planning, available at www.easysearch.sg/ishop
1 comment:
RW,
You have certainly been ripped off. If the BI says you can break even after 14 years (somemore this is based on the optimistic outlook), then realistically the breakeven is at least 3 years more i.e. 17 years.
And btw, is this policy adequate to cover your dependants? Is it for at least 5 times your annual salary? If not, then also lagi conned.
Unfortunately there is little you can do. Even if you could claim against the agent/insurance company for improper & incompetent advice, 99.99% that MAS and Fidrec will not side with you.
You have already been conned into paying 3 years of premiums. This 3 years is neither here nor there.
First of all, within these 3 years, most of your premiums would already have gone to the agent and his manager in terms of commissions, incentive cash bonus, incentive posh dinners at 5-star hotels, and free overseas holiday trips.
Secondly, this means that the cash value is non-existent or pathetic. Which means that Surrendering or converting to Paid-up is a sure BIG LOSS to you. For some people, they will just cut-loss and do the above 2 methods.
IMO, the best way is:-
1) Firstly get yourself adequate Shield plan (payable totally by Medisave).
2) Make sure you get covered by cheap term insurance that is ADEQUATE for your dependants and for the correct DURATION.
3) Then and only then, get your insurance company to REDUCE the wholelife sum assured to the bare minimum (usually is $10K). You will then be paying maybe around $30 per month. You can then surrender this wholelife policy years down the road when you can minimise the losses.
The objective is to minimise your cashflow to the blood-sucking insurance company, while at the same time getting proper insurance and deploying the extra cash savings into REAL retirement planning.
I bet no financial planner, consultant or high-falutin relationship manager will ever give you the above analysis & advice.
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