Monday, October 07, 2013

Parents, help your children to make the right start in financial planning

I wish to give this important message to parents. The little things that you do, can mean a lot to the future of your children.
They are now studying hard, to get good results for their university examinations, to look for a job. After they land a job, they will work hard (day and night) to do it well, aiming to get a promotion and an increase in salary.
A part part of their hard work is likely to be wasted. Why? Whatever they earn, whatever they save, is likely to be taken away from them, due to a bad financial decision. This happened to 30,000 people every year. 
They are going to buy a bad life insurance policy, most likely an investment linked policy, that will take away 40% of their savings. 
And you, the parent, should take a large part of the blame. Why? You did not give them good advice. 
Here is what you can do. Buy the two books written by Tan Kin Lian and give it to them as a gift. The titles are "Practical Guide on Financial Planning" and "Get Value for your Life Insurance". Each book cost only $12. 
They can save $100,000 for your child, if they read them and avoid buying the bad life insurance policies. 


zhummmeng said...

Yes, not only kids but parents should read these books and protect themselves against the dishonest insurance agents who have no qualms pushing those expensive and high commission products that will leave their clients under insured.
Another good news is these parents can buy life insurance without paying commission to agents next year June 2014 after learning about life insurance from the books.
All this is happening because the insurance agents are either dishonest or incompetent. CASE reported in creased complaints against agents and insurers last year. Consumers have to be wary of them. They are not to be trusted anymore.

william said...

While I agree that term insurance offers the best value for protection given its low premium, the book suggested that one does not need insurance after 25 years which I feel may not be true for everyone.

The children may have grown up and financially be independent, the health of aged parents may becomes a burden on them if they do not have insurance policies that cover critical illnesses or disability. Health insurance like medishields may pick up a major portion of the medical bills but there are other expenses that one will have to dig into their savings without any insurance.

The problem of relying on term insurance alone is tbat most people will wait till the maturity then realise that they may need insurance beyond their original thoughts 25 years ago, but by then they are too old and too costly for them to take up new insurance policy. On top of that they may have medical conditions that excludes them from covers.

Hence it is essential for anyone who bought term policy to constantly reviewing their needs and coverage, and make the necessary adjustment as times go. The same apply to certain type of term policy such as mortgage decreasing term policy, as the benefits may be reduced to such a low level towards the end of the term it becomes not very useful to continue paying the same premium.

Note that many insurance policy or riders had a last entry age of 60, so it is particularly important to do a review before reaching that stage.

Buying term policies and investing the savings separately does not guaranteed any returns versus a carefully selected investment linked policy which can yields a decent cash values overtime, therefore reducing the overall cost of premium if one choose to surrender or withdraw the cash values partially.

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