Friday, August 08, 2008

Benefit illustration

Hi Mr. Tan,

I am 20 this year. I had just graduated from diploma and had just starting my first career. Being the breadwinner of the house, I think having a insurance/policy will be safer. I am currently thinking which type of policy should I take. However I am kind of confused. After reading through your website and blog, I get exposed to more information which I neglect previously. However there are still several question which i will like to clarify with you.

Is cash value equivalent to surrender value Where can I fine the cash value in my benefit illustration ? What is gross yield and net yield? Where can I find the gross yield and net yield in my benefit illustration ?

REPLY
Cash value is the same as surrender value. The gross yield is the yield that the insurance company expects to earn by investing your premium. This yield is not guaranteed. The net yield is the yield that you can earn (not guaranteed) after the charges have been deducted by the insurance company.

You should ask the insurance agent to show you these figures in the benefit illustration.

Due to the high charges, a life insurance policy gives a poor yield. It is better to buy a Term insurance and invest the difference in a low cost fund. This is explained in this FAQ:
http://www.tankinlian.com/faq/fptips.html
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1 comment:

zhummmeng said...

Being 20 and you are already a bread winner with such responsibility. You also just graduated. Can I assume you earn not more than $2000(aggressive estimation) and also you are supporting your parents.
What are your concerns? Protection in case you are not a round? Need a saving plan for emergency?
WHOLELIFE PLANS OR ENDOWMENT ARE NOT SUITABLE FOR YOU.
Buy a 10 year renewable term of $250K for less than $30 monthly and save whatever money left into a ID7
ideal plan from NTUC. Don't waste your money on whole life or plans with cash value, they are the worse in term of protection and saving. As a young man with great responsibility you need to S-T-R-E-=T-C-H your resources to maximize the return and protection at the lowest cost.
Do you know you have to take up a lot of insurance? Don't let WL plan drain you off. Other than the $250K dependent income insurance, you need medical insurance like H&S and critical illness for income replacement and disability income insurance. You see your needs? a lot, right? What is need? It means if you don't meet them you will be in trouble, right? and that is different from WANT.
Don't let insurance agents rob you of your needs. Get a honest and qualified adviser who can ADVISE on insurance planning and NOT an insurance agent who sells and pushes products with high commission to you. They are different, the adviser helps , the insurance salesman robs.

August 08, 2008 9:25 AM

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