Sunday, February 03, 2013

Calculate yield on a complicated life insurance policy

Several people have asked for an Excel spread sheet to calculate the yield of the life insurance policy.

This spreadsheet is now available at the FISCA website, FOR MEMBERS ONLY.  You have to login and download the spread sheet to do the calculation.

The spreadsheet can take care of premiums that are payable over a limited period and also for benefits that are paid out in cash at certain duration of the policy.

It also calculates that amount that you should get, if your premiums earn you a yield of 4% per annum. I consider 4% to be an acceptable yield, for a life insurance policy that provides protection. Any yield lower than 4%, makes the life policy unattractive.

The information page of FISCA is shown here:

1 comment:

Spur said...

Frankly the rule of thumb now for insurance in S'pore is to expect only 2.5%-3% yield if you can hold on for at least 20-25 years.

If less than 20 years, than expect no more than 2.5% yield.

If you are looking for above 3% yield, you have to get out of insurance products. And get yourself educated in ETFs, indexed funds, asset allocations, liquidity, prudency, and other fundamentals of personal financial planning.

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