Sunday, January 09, 2011

Life insurance policies and benchmark of 20%

Hi Mr Tan,
You always mention that Benchmark for Deduction should not more than 20% after 25 yrs for life insurance.
Do you mind to tell me which are the insurers that meet this benchmark ?

REPLY
None of the life insurance policies in the market now meet my benchmark of 20% deduction. It is better for the consumer to buy term insurance and invest your savings in an indexed fund. The long term cost is likely to be less than the 20% deduction. Read my book on financial planning (available at www.tankinlian.com/ishop).

If consumers reject the existing life insurance products that offer a low yield, the insurance companies will be forced to offer new products that give better value to consumers, i.e. meet the benchmark of 20%. It is possible for them to achieve this goal.
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3 comments:

zhummmeng said...

There is NO insurer that meets this 'benchmark'.Everyone of them is in the business to fleece as much money out of the consumers.
The best precaution to take is NEVER buy a par product. Par products are products that have a 'saving' element. It is falsely marketed as a saving plan so that the insurance agents can earn fat commission and the insurers can use your cheap capital to invest to finance their management high living cost life style and charge high mortality charge when you are old.The agents and the company work hand in glove to cheat the consumers.
Remember this. A good saving plan is a plan that gives you double the inflation return. The average long term inflation rate is 3.5% and any saving must give about 7%. Only by saving above 7% there is real growth.
All the par insurance plans don't return 7%. All of them , in fact , return 2.5% even after 30 donkey years. 2.5% is a loss, ie you are worse than you were 30 years ago.Is this saving?

January 09, 2011 3:01 PM
JasonX said...

Its a good effort to come up with a 20% benchmark figure. However, the majority of consumers are not savvy enough to do the maths.

To make things worse, insurance agents will always exert pressure on consumers to take up life policies instead of term plan.

I personally do not have any life policies as I also believe it to be unattractive (high distribution cost, low interest, long lock up for my savings).

Consumers, do yourself a favor and read up before buying. Bear in mind that agents earn the bulk of their income through selling life policies, and is unlikely for them to offer a neutral advice.

January 10, 2011 10:34 AM
ideal said...

Ever heard of those people who took out million dollar policies on their spouse then murdered them? That was to get a large lump sum with minimum investment.

http://www.smile-boxes.com

January 12, 2011 12:22 AM

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