Tan Kin Lian's Blog: I need to be protected for dread disease

Saturday, February 17, 2007

I need to be protected for dread disease

Dear Mr Tan,

Recently, I have been thinking of buying a life policy, my reasons as below:

I have a wife and 2 very young children and thus I need coverage for them. Sum assured should be $200,000. I would like to have returns for money invested.

Reading your BLOG, you would say to buy a decreasing i-term insurance for myself so as to protect them.

But if I'm hit by 30 major illness, the i-term would not help as I would need lots of money to see doctor whch is very expensive. I would have to buy a living rider and that cost a lot of money. Using the above policy, there is no return and my money will go down the drain.

KS

--------------

Dear KS

I suggest that you ask the insurance adviser to give you the quote for the following:

Living policy to cover $200,000
Decreasing term (extended to cover dread disease) for $200,000 for 30 years

If you take the difference in premium and invest it to earn 6% per annum (not guaranteed) in a large, well diversified low cost fund), you will find that the total invested sum with gains will exceed $200,000 at the end of 30 years.

If you can get the figures for me, I can calculate the projected maturity value for you.

Wish you all the best for the Lunar New Year.

Tan Kin Lian

5 comments:

Anonymous said...: Dear sir,

My husband has a $100k whole life policy which pays upon death/critical illness, plus another investment link policy, annual premium $2400, no critcal illness cover. A few months ago, I felt the need to increase his critical illness cover and after checking around, bought the cheapest plan in the market SAFRA Living Care. However now I'm concerned that the cover is only up to age 65. Should I be bothered by this? Any advice? Thank you.; February 18, 2007 10:27 PM
Tan Kin Lian said...: When a person reach age 65, it is likely that most of the children are grown up and have started work. At that time, this person has probably accumulated sufficient savings. The need for insurance coverage is diminished.

Although the SAFRA insurance plan expries at age 65, this should not be a concern. The whole life plan should probably be adequate for your family needs.; February 19, 2007 8:11 AM
Anonymous said...: Thank you. I feel reassured to have someone knowledgeable and objective like you to turn to for advice.; February 19, 2007 10:55 PM
Thomas Phua's Blog said...: I have 3 wholelife Living Policy taken when I was age 28, 30 and 32.

I am now coming to 47. I have many other policies as well.

When I reached age 60 or 65, I may consider to place my Living Policies on automatic premium loan which can covers me into old age. I believe then the cash value is able to shoulder the plan until I expires.

Alternatively I will have my 3 children, each to foot for a policy each and they are the beneficiary then.

I find these options may be good that they need not worry too much if I contract a dread disease in my old age.

On top of that a Shield Plan is essential.

Currently, Income also has limited payment premium Living Policy. One can choose to pay premium for 20 years and cover wholelife.

This limited payment Living Policy perhaps is also good for children. Imagine buying a policy for the baby and pays 20 years and the insurance company has to carry the baby wholelife, literally.; February 21, 2007 10:16 AM
Tan Kin Lian said...: If you stop working, you have the option to convert the policy into a paid up policy for a reduced sum assured (plus bons).

You are not required to pay the premium after the conversion.

This is a suitable plan for many people.; February 21, 2007 8:12 PM