Saturday, August 23, 2008

Financial planning for a young family

Hi Mr. Tan

My husband and I are doing our reviews of our profile. My financial planner recently recommends that we increase our critical illness coverage to at least $125K, via a limited pay term insurance. The two products recommended are Asia Life TM Legacy and NTUC Income Vivolife.

I have read your FAQ and I'm not sure if we should be increasing the critical illness coverage by another $100K. We have two young children, that's also the reason why we want to ensure at least we are sufficiently covered.

REPLY

Both of these products are high cost products that give poor value to the consumer. I advice people to buy a 20 year Level Term insurance, and to invest the difference in a low cost fund.

You can see some examples of the difference in the FAQs in my blog:

www.tankinlian.com/faq
http://www.tankinlian.com/faq/true.html
http://www.tankinlian.com/faq/age65.html
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3 comments:

zhummmeng said...

If you are contributing to the living expenses of the family you need share the dependent income need insurance cover. You can increase your CI cover too.
If you use term insurance to cover your needs the total premium won't come to more than $50 a month. Isn't this a better option.? First they provide ADEQUATE coverage,a must and which is the THE MOST IMPORTANT. Secondly, whatever spare money you have left,you can invest directly in a regular saving plan like ID7 from NTUC business centre.This gives MUCH HIGHER return than whoelife and endowment.If your planner is concerned for you this is the Plan.
The $50 is an estimate because other information are needed like monthly expenses , your contribution, your children's ages, your age and so forth.
Anyway, if your planner is honest about helping you, use term insurance and investment. If he or she tries to talk you out by using risk as the reason then you can forget about them because it is clear they are NOT QUALIFIED at all and they only want high commission from selling you vivolife and TMAsia life legacy.This isn't time to talk about legacy. Your needs are to be addressed NOW.
Like what Susse Orman would advise you in the video, fire and change your adviser and get one that is HONEST AND COMPETENT and for you and not for themselves.

August 23, 2008 10:43 AM
Unknown said...

Base on personal opinion, I DO NOT think that 20 Years level term insurance is the best solution.

We all know that MR TAN KIN LIAN is very PRO buy-term-invest-rest concept but this may not apply to every single soul out there!

How old are the couple and how old will they be after 20 years?

Are you trying to say that they do not need insurance anymore after 20 years?

PS. I challenge you to approve this comment.

August 23, 2008 1:52 PM
zhummmeng said...

Mr. Brembo,
20 year term may not suit 'every single soul out there' but term insurance DEFINITELY suits 99.999% of the souls out there. If you are thinking of whole life or endowment, they only suit the rest and insurance salesmen.
20 year term may not be the best but it is MUCH better than WL or endowment.It is cheap.It may be a renewable 20 year term and when it is not needed it can be thrown away. It also assures the insured will have adequate insurance at a time he or she needs most.This is the purpose of insurance and insurance has no other purposes. It should focus on what it can do best and term is the among the best.
Are you an insurance agent? If you are, you need to get a BETTER understanding of life insurance planning.

August 23, 2008 9:37 PM

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