Why you should not buy a life insurance

[manu2000one]

You should of course purchase some insurance (like term/mortgage) to protect your loved one, but life insurance is the worst choice. I explain why using my policy with Great Eastern Life on my blog.
Sorry can't post the link, but you will find my blog by googling: greateasternlifedont blogspot.

 

[chopra]

mortgage is simi insurance?

 

[WuMing1234]

if im not wrong, mortgage insurance is when the insured dies, the family need not service the remaining housing loans.

 

[WuMing1234]

Well the point you did brought across is that life insurance should never be looked as retirement/savings/investment that is usually been marketed by the agents.

To be fair, instead of judging it from an investment point of view, maybe we can look at life insurance from a family guy perspective who would never thought of surrendering it as he believes the more he contributes, the more the family would receive upon his death. Different ppl, different perspective, different thinking.

Of course, i personally support the buy term and invest the rest concept and it is not economical to buy a life insurance. I have friends who are mid 20s and struggling to pay their annual premiums. They got locked down by it and they has no remaining funds to invest.

 

[quantcall]

You should of course purchase some insurance (like term/mortgage) to protect your loved one, but life insurance is the worst choice. I explain why using my policy with Great Eastern Life on my blog.
Sorry can't post the link, but you will find my blog by googling: greateasternlifedont blogspot.

hope u don't mind i copy the link of your blog here
Why you should not buy Great Eastern Life Insurance: Returns GE Life compared to a 0.25% savings account + NTUC Plus! Term life

agree that in terms of monetary return, life insurance is not attractive.
but ppl need to know how to invest wisely to ride on the right track, which takes time and effort. some ppl simply don't have the time, then they may look for life insurance...

 

[quantcall]

hope u don't mind i copy the link of your blog here
Why you should not buy Great Eastern Life Insurance: Returns GE Life compared to a 0.25% savings account + NTUC Plus! Term life

agree that in terms of monetary return, life insurance is not attractive.
but ppl need to know how to invest wisely to ride on the right track, which takes time and effort. some ppl simply don't have the time, then they may look for life insurance...

anyway, GE use your premium to invest into various financial assets and make money from the difference between their investment return and the return promised to you.

 

[lusunshine]

TS, how you get the surrender value of the GE policy from? After 40 years, the surrender value still cannot break even with the total premium paid???

 

[WuMing1234]

The plan he compared is a limited premium plan which he pays only for 10 years and doesnt need to pay there after.

Therefore, lesser premiums contributed, lesser money left inside to roll bonuses.

 

[manu2000one]

Well the point you did brought across is that life insurance should never be looked as retirement/savings/investment that is usually been marketed by the agents.

To be fair, instead of judging it from an investment point of view, maybe we can look at life insurance from a family guy perspective who would never thought of surrendering it as he believes the more he contributes, the more the family would receive upon his death. Different ppl, different perspective, different thinking.

Of course, i personally support the buy term and invest the rest concept and it is not economical to buy a life insurance. I have friends who are mid 20s and struggling to pay their annual premiums. They got locked down by it and they has no remaining funds to invest.

If you mind to check my blog, I compare the life insurance policy with a term insurance from NTUC, covering the same amount in case of death: 40k, and leaving the rest in saving account. The term insurance cost $3.60/mth and provide the same level of protection (actually $2000 more) than the great eastern policy. The rest of the premium can be saved or invested. The details are in the blog.
The low surrender values during the policy period are not justified. They have no benefit for the consumer and only serve the pay the agent sales commission and a guaranteed profit for the insurance company.

 

[manu2000one]

TS, how you get the surrender value of the GE policy from? After 40 years, the surrender value still cannot break even with the total premium paid???

I got the surrender value from the policy, which I scanned and attached to the blog. You may download it by clicking the link.

 

[manu2000one]

The plan he compared is a limited premium plan which he pays only for 10 years and doesnt need to pay there after.

Therefore, lesser premiums contributed, lesser money left inside to roll bonuses.

Yes, but the bonuses are not guaranteed. The surrender value is around 77% after 40yrs.
Indeed this is a 10yrs plan with a surrender value of 55% of the premium paid after 10 yrs. The cash bonus will never make up the difference, hence the longer you keep the policy, the more you lose.
Let's say the bonus is a consistent 5% a year, then compare with the last column to see what would give you a 5% combined with a term protection.
The point is regardless how you want to see it, the amount made by the sales agent commission + GE margins will be your lost. While the policies are designed to make you believe that if you keep them for a long time, it will be beneficial, the fact is just that you will just lose more.

 

[manu2000one]

mortgage is simi insurance?

Mortgage insurances are very different. You can cover a very high amount for a very reasonable cost. If you have a home loan, I strongly encourage you to take a mortgage insurance.

 

[lifeishard]

term doesn't cover you for whole life while your GE does therefore i do not understand your statement of the longer you keep,the more you lose.

 

[manu2000one]

Yes you are right. Once you are done paying the premium, in my case, 10yrs, from there onward you will not lose more money by keeping the policy.
Term insurances only cover you for as long as you pay and up to 65.
What I meant was the longer you keep paying the premium, within 10yrs for my plan, the more you lose.
For a coverage of 38k, the premium paid would be 34.9k. That means if you die GE only need to make up the 3.1k difference. You may be covered for life, but the coverage vs premium paid still doesn't justify the difference.
If you place the premium of $34,900 at 5%, after only two years you have $38,477.25, which is already more than GE benefit in case of death.

 

[WuMing1234]

If insurance firms were to sell term and hospitalisation plans only , all insurance firms will close down.

 

[lifeishard]

Yes you are right. Once you are done paying the premium, in my case, 10yrs, from there onward you will not lose more money by keeping the policy.
Term insurances only cover you for as long as you pay and up to 65.
What I meant was the longer you keep paying the premium, within 10yrs for my plan, the more you lose.
For a coverage of 38k, the premium paid would be 34.9k. That means if you die GE only need to make up the 3.1k difference. You may be covered for life, but the coverage vs premium paid still doesn't justify the difference.
If you place the premium of $34,900 at 5%, after only two years you have $38,477.25, which is already more than GE benefit in case of death.

wrong again...if you paid 34.9k or even lesser,when something happened to you,insurance company pays you more than your original coverage of 38k.

 

[manu2000one]

Clearly that is not true.
There are very profitable medical only private insurances (maybe not in Singapore though).
Term insurances can and are profitable on their own.
But indeed the life insurances should be the most profitable products for these company, that's why the agent commission is so high on life insurance plan. And this is precisely why you should not buy one.
High profitability for insurer(/agent) = low death benefit, high premium and ridiculously low surrender values.

 

[makav31i]

Clearly that is not true.
There are very profitable medical only private insurances (maybe not in Singapore though).
Term insurances can and are profitable on their own.
But indeed the life insurances should be the most profitable products for these company, that's why the agent commission is so high on life insurance plan. And this is precisely why you should not buy one.
High profitability for insurer(/agent) = low death benefit, high premium and ridiculously low surrender values.

Life insurance is not really that profitable...company would rather you take up their investment linked policy or the savings plan...The only difference between term and life is that life have a surrender value whereas term is a one time payment that you won't get back if you did not die by the stated age in the policy...

 

[chopra]

If insurance firms were to sell term and hospitalisation plans only , all insurance firms will close down.

define insurance.

maybe next time giant, ikea, cold storage, singtel, sembcorp, hdb, capitaland should sell life and ilp too

 

[manu2000one]

Life insurance is not really that profitable...company would rather you take up their investment linked policy or the savings plan...The only difference between term and life is that life have a surrender value whereas term is a one time payment that you won't get back if you did not die by the stated age in the policy...

The other difference between term and life, is that if you save the difference between the premiums, you'll have much more money at the end. For my plan of around $300/Mth, the diff is $15k after 10 years.