Tan Kin Lian's Blog: Unable to comment on specific products

Sunday, June 22, 2008

Unable to comment on specific products

Hi, Mr. Tan,
I have signed up for the following life insurances:

1. Life Protector Plus is uniquely designed to give you maximum and permanent life protection at a very affordable rate. It provies up to 140% extra coverage in addition to your chosen sum insured till age 65. Protection for loss of life, terminal illness and total and permanent disability (TPD). In the event of TPD, a lump sum benefit will be paid. Choice of supplementary benefits available for additional benefits and protection.

2. Nest Egg is a regular premium participating endowment plan which allows me to participate in the performance of the participating fund in the form of bonuses that are not guaranteed.There will be no bonus paid on death or TPD claim. IRR for a sum assured 50k, cover term of 20years and premium term is 15 years is 3.6%

Are these products suitable for me?
P

REPLY
I am not able to comment on these two specific products. Generally, I dislike them due to the high upfront cost to pay commission to the agent.

I advise consumers to buy term insurance and invest the difference in a low cost investment fund.

Read these FAQs:
http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/savings.html

8 comments:

zhummmeng said...: As a rule of thumb, never buy whole life and endowment plans. In term of protection and return both shortchange the buyers. Is 3.5% after 20 years a good return?
First, it does not make your money work any harder against inflation, assuming long term rate of 3-3.5%. No real growth and this makes it a very poor saving plan.
Secondly protection is limited to how much you can afford or your resources. Can you afford a $500K for this type of plan? This type of plan is used primarily to address dependents' income need and it is always needed big. What about $500k for $40 monthly premium as compared to a $50k sun assured for $120 monthly , (assuming you are 30 years old). Which one you NEED, $500K or $50K?
If you WANT $50K and don't NEED the $500K i have nothing to say and this fits nicely into the insurance agent's scheme of things of what you should have. I am sure you know why.The agent is more interested to get you to buy the wholelife (permanent life) than the term of $500K because he gets more commission selling you less coverage than more coverage.
Come on, all those lump sum benefit, terminal and TPD are of secondary importance.Most important is death , premature death is your greatest concern when you have a dozen of people depending on you for their living expenses. TPD, you better look closely at the defination; not easy to claim. A better way to address disability is income disability income insurance.
Terminal benefit is a crap. It is a redundant benefit.
Besides the above , what about Critical illness cover? Do you know you need to cover 3-5 times of your annual income to replace your income?
For saving and regular invest choose a RSP. It is a better than the useless endowment. Do you want a lower risk and high return of 8% to beat inflation? This is the one.
Separate your protection and saving and take charge and don't let the insurance company and its insurance agent screw up your life. You don't have worries of low annual bonus and risky special bonus and all the craps you get from insurance companies from time to time. Taking charge yourself ensures that you have "high annual and special bonus" anytime.You don't have to wait for the whims and fancies of the actuary.
Wait a minute, to ensure success engage an HONEST CFP adviser to come alongside you and not the hit and run and run of the mill insurance salesmen or women to advise on your personal finance.
The CFP adviser is your ADVISER, COACH, COUNSELOR AND PARTNER.; June 23, 2008 12:55 AM
siewkhim said...: Guys,

Avoid participating and investment linked policies from any insurers in the universe. They are crapy, hoodwinked and bullshit policies.I am a victim of this kind of crapy policies. My yield on termination of a participating policy bought from NTUC Income after paying premiums of more that $1000 per annum for 17years is less than 1%.

Buy term and invest the difference.; June 23, 2008 10:36 AM
zhummmeng said...: I notice this issue or rather enquiry on whole life and endowment keeps surfacing in this blog despite many have been told that they are bad products and not value for money and alternative to these is buy term and invest the rest.
Perhaps I should put to rest once and for all about whole life and endowment.
Whenever one buys an insurance plan these are the criteria to determine whether it is a good or bad product.
1.Is the return 2-3% above inflation?
2.Is the protection high for every dollar of premium? eg 1:1000/2500
If a product can meet or come near to these criteria you may consider otherwise just throw it out of the window.; June 23, 2008 4:56 PM
siewkhim said...: Dear Zhu,

You are right that "should put to rest once and for all about whole life and endowment".

But because of the potential danger of the ignorant public being conned, I suggest we constantly put up reminders like "BEWARE OF PARTICIPATING POLICIES. AVOID THEM. DON"T BUY THEM"

We really don't konw the real return at point of sales. The agent has his fancy "sales illustration" promising the moon with all the legal safeguards we are often not disclose completely to the policyholders. The all "economic scenarios projections" We can only know the actual performance of the product after paying premiums 10-15 years. By the time it is too late. My living policy from NTUC Income gives me less than 1% yield on termination.

So how to consider when everything is a projection and nothing is guaranteed at point of sales.; June 24, 2008 12:27 PM
zhummmeng said...: What do you guys think of this scheme or scam. At the roadshows ntuc agents are promoting buy Revosave and use the cashbacks(refunds) to pay for the limited premium wholelife Vivolife.
Revosave is an Anticipated endowment.
Vivolife is a limited premium payment whole life.
The call it buy one get one free.
Is it justifiable?
See post below" A complicated product with low yield" to understand about revosave.; June 24, 2008 10:09 PM
siewkhim said...: I do know. NTUC Income is a cooperative entity. Apparently their agents are now trained to sell like the commercial life insurers. It is very frightening.; June 25, 2008 12:34 PM
zhummmeng said...: Isn't that schame bordering on scam?
Why are they stooping to such low down devious means to con the unwary consumers? Must call the police in.; June 25, 2008 5:36 PM
siewkhim said...: I once heard an Apek of a fishmonger said, " When a fish rots, it start from the HEAD"

At that time I simply don't see its full meaning.

AH!!!! I see it know.; June 29, 2008 12:09 AM