A man visited my office to buy my life insurance book. His son, who was just about to start work in a contract job, was approached by an insurance agent who recommended to him an investment linked policy with a monthly premium of $300 and other riders to cover death, accident and disability with a total monthly premium of $70. The son had no idea about what the policies were for, so he approached his father for advice (what a sensible young man!). The father approached me.
I analyzed the policies and came to the following conclusion:
a) The investment linked policy had a projected value, at the end of 30 years, of $180,000 (based on the average between the 4% and 8% yield).
b) If the son invested the same money in the STI ETF earning an average yield of 6% (similar to the projection), the projected sum is $280,000, after deducting expenses and setting aside $10 for the cost of insurance.
c) He does not need to spend $70 a month for the additional covers. By spending $30 a month, he will have adequate term insurance under the SAF policy.
The father decided to enroll himself and his wife and son for the Financial Planning talk on 21 July to learn about financial planning for his son.
He was glad that he saw me, as this information could give his son an additional $100,000 in 30 years time.
I wish to send this message to other parents. Your children will also fall into the trap of buying the wrong investment product. Enroll them and get them to attend the financial planning talk.
http://c-onyx.com/page/1056
Note:
Although the investment linked policy use a projected yield of 6%, the actual yield is only 3.2% due to the charges and upfront fee, amounting to 2.8%.
For the STI ETF, the net yield is 5.7% as the annual fee is only 0.3%
I analyzed the policies and came to the following conclusion:
a) The investment linked policy had a projected value, at the end of 30 years, of $180,000 (based on the average between the 4% and 8% yield).
b) If the son invested the same money in the STI ETF earning an average yield of 6% (similar to the projection), the projected sum is $280,000, after deducting expenses and setting aside $10 for the cost of insurance.
c) He does not need to spend $70 a month for the additional covers. By spending $30 a month, he will have adequate term insurance under the SAF policy.
The father decided to enroll himself and his wife and son for the Financial Planning talk on 21 July to learn about financial planning for his son.
He was glad that he saw me, as this information could give his son an additional $100,000 in 30 years time.
I wish to send this message to other parents. Your children will also fall into the trap of buying the wrong investment product. Enroll them and get them to attend the financial planning talk.
http://c-onyx.com/page/1056
Note:
Although the investment linked policy use a projected yield of 6%, the actual yield is only 3.2% due to the charges and upfront fee, amounting to 2.8%.
For the STI ETF, the net yield is 5.7% as the annual fee is only 0.3%
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