Many agents will tell you about the new products that have been recently introduced. Most of these products have the same features - marketing gimmicks, complicated to understand, high charges, poor return to the investors. Do not believe what the agent tells you, as they will usually exaggerate the good features (such as potential high return) but hide the bad features (i.e .not guaranteed, returns are exaggerated). They usually do not tell you that more than half of your savings is taken away from you to pay their commission during the initial few years.
If you have received a benefit illustration on a life insurance policy, and you are not sure what you have bought, you can send it to me at kinlian@gmail.com. I will help you to see if you have been given the correct information by the agent.
Tan Kin Lian
15 comments:
The problem is the agents won't tell or won't be able to tell you the projected return.
First they are too shy to tell you the miserable return.
Second, they don't know how to calculate and yet these salesmen's name card shows they are 'financial consultant'.It is an insult, isn't it?
I met one ntuc agent who was trying to peddle their vivolife limited payment to me. After listening to all the craps of the product features I asked her to tell me the projected return after 20 years.
Instead of answering my question she went round the bush telling me about bonus that could hedge inflation. I was amused.I told her if she could not tell me the rate of return how did she know that it could hedge against inflation.
Her name card showed 'senior financial consultant'. Yes, she looked senior alright, middle aged but financial consultant---NO.
So you see there are a lot of these salesmen masquerading as consultants to con unwary and gullible consumers.
I wonder what does MAS think about these misrepresenting titles so freely used by insurance salesmen.
If MAS can regulate the use of the title 'investment adviser' I don't see why it cannot do for this 'consultant' cheats.
Consumers must realise that the par products like wholelife, endwoment are poorer products than the old ones becuase of increased costs.To cover up the insurers use many useless 'supplementary' benefits to make them look good. Yes, only to make them look good but beneath these 'supplementaries' is a rotten core.
Another example is the popular 'limited payment' wholelife product.The consumers are stupid to think that it is a new product. In fact it is an old product with its variables tweaked.Also it is to consumers' disadvantage. They get lower coverage but pay more and the return poorer . If consumers are interested in limited payment products an alternative like limited payment term product which is a lot cheaper and with higher coverage except no cash value. There are even single premium term products available. So what is it the consumers want?
Remember insurance is to address risks and you must have enough and only term can address FULLY at affordable cost.
I am nearly 60 years old. I am not sure if I should covert My full Minimum Sum Scheme savings to CPF Life. Is CPF Life better than MS? Any help would be appreciated.
Ask yourself if you could live more than 20 years after 65.
What is your health status?
What is your family life expectancy?
Your siblings ?
If your answers to above are in the negative I suggest you leave your MS and draw down until it is finished. You can decide the monthly amount you want or lenght of payouts. You need to arrange with CPF.
If you are buying CPFLife ask yourself this question.
Do you want to leave a legacy?
If yes, choose a plan with the right legacy..
If you have no one to leave any cent to choose the highest payout plan.
Don't buy any commercial annuity.Anyway only one left is NTUC.
Don't buy too. It is inferior by a mile.
Whether to use fully your MS? You have to use fully. You can't take out your MS becuase you have already taken out some when you hit 55, right? Anyway, the more you use the bigger is your payout and it is compounded at between 3.75% and 4.25% or more. Where can you get this rate?
It is incorrect to say that the amount used to purchase CPF Life will earn compound interest at 3.75 - 4.25%. This is not true. In fact once you buy cpf life, the compound interest will go into a pool, which will be shared by all that join the scheme.
The biggest disadvantage of CPF Life to an individual is that the interest earned on the annuity premium will go to the CPF LIFE fund, from age 55 to the respective draw-down age of 90, 80 or 65, and thereafter. There is no rebate on the interest earned in the event of death of the member.
The interest forgone is significant in sum. For example, a 55 years old, Male, with just $40000 in his CPF, and enrolled in LIFE Balance, will stand to lose about $19990 in interest (from age 55 to 80) as a result of the $12000 annuity premium, as the interest earned will be credited to the CPF LIFE Fund instead.
That means the lost of bequest of up to $19990 if the person signs up for the LIFE Balance and does not live up to age 80 or a loss of up to $11780 for LIFE Basic if the person does not live up to age 90.
This would not be the case if the sum was retained in the CPF Retirement Account (RA) and earning interest that is credited back into the RA.
Assuming the same withdrawal of $343 from age 65 onwards (as per LIFE Basic), the $40000 in the CPF Account can last up to age 96.
Assuming the same withdrawal of $362 from age 65 onwards (as per LIFE Balance), the $40000 in the CPF Account can last up to age 92.
US actuarial life table (2005) indicate that for a 55 year old male, life expectancy is 24 years or age 89.
That indicates for the vast majority, limiting the withdrawal to the above monthly limits, but leaving the sum in the CPF RA would yield a far greater benefit than participating in the scheme.
The L-Bonus distorts the above for those above 53 of age.
Based on my calculation, if you have more than $20000 in your retirement account, there would be no benefit in signing up for CPF life.
Those with ntuc annuity or other insurers' should consider canceling them and convert to CPFLIfe. You have more to gain and nothing to lose.
Don't let this talk about payouts going zero or uncertain payouts. The uncertainty may happen but it will vary within a range. Even at the lowest range which is unlikely it is still much higher than ntuc. What about it goes up beyond 4.25% which in good time it will happen.Only insurance salesmen without your interest in mind will lie to you about CPFLife.The reason is obvious. The agents can't sell you any annuity, thus they cook up some lies to frighten you.
Get a true honest adviser to talk to you objectively.
Did anybody read an article which said that after her son's comparison, the woman gathered that CPF Life would give her $100 more per month than INCOME's annuity?
The figures in CPF Life were not clearly revealed. I wonder how to make a fair comparison.
Key the lump sum amount that you would get from surrending your annuity and input into the CPF calculator. If you want a refund decide the plan which gives the right refund and you get the payout figure.Compare the figures and also the total amount, let's say when you are 95 or 100 years , add up and same time add up the annuity you would recieve over the same period.
Thank you guys for the input. I think I will leave it in the MSS instead of opting into CPF Life. CPF has not provided any clear comparison between the two. It gives me a feeling that they don't want me to know too much.
Your input has reaffirmed my position. Thank you very much.
I think you guys should not be anti-CPF life. It is a better initiative from the Government and it is to help people to extend their savings. You will get enough to get by. The larger the pool, the better it gets and it is for life coverage.
If one maintains the current minimum sum of $117k in the RA or CPF Life, when we reached 65, which scheme will pay out more monthly - RA or CPF Life??
MSS, of course but not for life.
MSS pays double what ntuc pays. There are some idiots unwary consumers still being conned by ntuc agents.They should report to MAS and have their license revoked for unethical practice, for half truth and lies
Many who bought ntuc annuity are switching to CPFLife now becuase it pays more. Consumers should do quickly as there is a deadline.
To Anon 7:01PM
I don't think anyone is anti-CPF-Life. I decided to stay with MSS because in the lack of comprehensive comparisons, I simply consider that when I withdrew my MSS at age 65, the MSS will pay me up to the age of 86/87. It's monthly payout is about 16% higher compared to that of CPF-Life Basic (if I understand it correctly). Additionally, all interest earned are mine (or my beneficiary) to keep rather than having to give some away to the pool fund.
I am not sure if I can live up to the age 86/87. If I am "lucky" enough to live beyond 87, I think the extra 16% I get per month over 20+ years should be enough to cover the rest of my life.
I am reaching 55 this year and if MSS payout is 16% higher than CPF Life is correct, i intend to leave it with MSS. Another reason, if you observe the ST obituary page daily, you will notice most of the ages are much lesser than 85. Of couse this may not have a true reflection of the fact but I believe (to me) it is a good guide.
BTW, is anyone able to provide the URL link in CPF website points to the monthly payout between MSS and CPF Life at 65 onwards.
If you think you cannot live beyond 85 it is better to leave with CPF and draw down on your MSS.
But be careful of charlatan insurance agents with false argument and who may waylaid you into buying their annuity. Since 2005 the annuities in the market were rotten and they never beat the CPF and yet charlatan agents conned many into buying. Those who bought them should get someone qualified to reveiw to see the advantages of switching to CPFLIFE.
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