Letter published in Straits Times Online Forum
Nov 19, 2010
MR TAN Kim Lian's line of thought ("Why only term insurance plans make sense now"; Monday) continues to perplex.
MR TAN Kim Lian's line of thought ("Why only term insurance plans make sense now"; Monday) continues to perplex.
He assumes term insurance is sufficient because it is low cost and gives the highest cover per dollar. This can be dangerous. Never decide based on price alone.
Term insurance is low cost but it may not be cheap in the long term. Once the insurance period ends, underwriting is required for renewal. If a person develops a medical condition before renewal, that no insurance company will accept, the person will be uninsurable for life. Also, if a person loses his job and cannot pay the premium when due, the cover terminates.
With whole life and investment-linked policies, there are usually cash reserves to automatically tide over the non-payment of premiums for some time when the policyholder is unable to pay.
I have different policies from various insurance companies for my family. My best policy is my investment-linked one. Not only does it give better returns than projected in spite of the different financial crises over the years, but it also gives me the flexibility to vary the premiums and cover through my different life stages.
I am also aware the insurance company made more money, but who cares when it is a win-win situation. We should be thankful that there are now more life insurance choices for people with different needs.
Lim Pueh Joo (Madam)
http://www.straitstimes.com/STForum/OnlineStory/STIStory_604763.htmlView this letter in Wordle
Update
I have sent my reply to this letter. I hope that the Straits Times will published it. I also hope that some of my readers will write a reply to this letter from Mdm Lim.
Read this article:
Investment-linked policy - the good and bad
www.tankinlian.com/latest.aspx
There are many things that this madam is unaware. She says her regular ILP is giving her good return. I doubt it.Over coming the high charges will take many donkey years. And when she reaches age 60 she may be shocked by the mortality charges she will be paying and that will make her to terminate. The charges will be even higher when she has critical illness cover.Regular ILP is similar to wholelife except that ILP is unbundled and flexible. But both are rip off. You never get a fair deal with both products than separating protection and investing.
ReplyDeleteAnyway she is a consumer . She will wake up one day to realise it. It is hard to wake up a consumer in coma.
yes nice information thanks for sharing such nice information for
ReplyDeleteLow Cost Life Insurance
I would like to share my own personal and other people's experience on ILP. Here is the article.
ReplyDeleteIf You Still Don't Believe ILP is a Time Bomb? One more experience shared ..
In investment costs erode return.
ReplyDeleteIn regular ILPs the costs are
agents' commission, mortality and morbidity charges, the operating expanses of the fund etc.
Most regular ILPs, there are exceptions which are actually RSP and not regular ILPs, don't break even until the 15th+ years assuming the underlying fund is returning an average rate of 7%. Compared to current traditional whole life regular ILP is better provided it is properly 'designed' and protection and saving properly balanced. WL breaks even at 20th-25th year.
BY and large regular ILPs and wholelife are rip off at the expense of the customers.