A consumer was given a proposal to pay a large annual premium for 5 years, keep the money until age 65 and withdraw an annual payment for life. The benefit illustration was confusing, even to me. I was not sure if this is a life annuity or withdrawal from an accumulation account.
I asked the consumer to use Excel and do the same projection, if he invested the money on his own to earn 3%, 4% and 5% in a low cost investment fund. He found that the DIY option gave him a large balance at age 91 - which is significantly higher than shown in the benefit illustration. The simple calculation gave an obvious answer to him - he should invest on his own.
He asked, "where do I get a low cost investment fund?" I recommended the STI ETF available on the Singapore Exchange (SGX). The investment risk can be managed by diversification (in this single fund) and investing for the long term to average out the good and bad year. This is explained in my book on financial planning (available at www.tankinlian.com/ishop).
This simple advice could save the consumer several hundred thousand dollars! Do not buy a bad financial product (or life insurance policy) that can take away so much of your accumulated savings. You can DIY.
Tan Kin Lian
- ► 2013 (304)
- ► 2012 (1270)
- ► 2011 (1873)
11/14 - 11/21
- Read my book - Practical Guide on Financial Planni...
- Business Times: UBS takes on couple in $9m lawsuit...
- Large increase in membership of FISCA
- Garrett Goh's original letter
- Garrett Goh: Strategy behind buying term insurance...
- Motor claims - protect consumer who make third par...
- Motor insurance premium
- Why Investment Linked Policy make a bad investment...
- Myths about Private Shield
- Election is coming - read SGEP
- Lim Pueh Joo: Investment-linked policy works best ...
- Medical insurance for elderly people
- Buy 2 get 1 free
- Ask Mr. Tan - Low cost investment fund
- Pretty good for Government work
- Shape Quiz (bundle of 10 minipaks)
- Intelligence Quiz - vol 1, 2 and 3 (bundle)
- Wisdom on How to Live Life (Book 3)
- USB Charger
- Articles in SGEP
- SCMP:Bank officer charged over minibond investment...
- Living on accumulated savings - DIY
- John Bogle - Investing in indexed fund
- Warren Buffet on Low Cost Investment Fund
- Dave Ramsey on Life Insurance I
- Suze Orman - Life Insurance is a bad investment
- FISCA talk - Insuring your Financial Security
- FISCA Talk on Financial Planning
- Costly rider to cover critical illness
- Financial Calcuation with Excel
- Choose a good life insurance company
- Living on your accumulated savings
- Suzy Orman - Cash value and Term Life Insurance
- Poor deal from a life annuity
- Economic Growth and Equity
- Donation to FISCA
- Suzy Orman on Life Insurance
- Existing life insurance policies - continue or ter...
- 33.3% discount on Financial Planning book
- Why only term insurance plans make sense now
- Life insurance - agent and consumers
- Misconceptions about insurance
- Noisy carnival at Bishan
- Gold investment scam?
- Interesting articles in SGEP
- Sound policies, impressive candidate for General E...
- Get a Fair Deal
- Vitamin Account (6 year SGD equity linked structur...
- Be prudent in buying insurance
- FISCA analysis of DBS preference shares
- ▼ 11/14 - 11/21 (50)
- ► 2009 (1655)
- ► 2008 (2105)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)