[Advice needed] Dying Insurance

[Extech]

Not sure if I phrased the title correctly. Just some details about this: Mum has been diagnosed with terminal illness, dad just happens to be 55 and can withdraw some CPF(80K without pledging property). Recently parents went to NTUC and agent told them they they can buy those insurance plan without any health check-up, will pay out 100/month for each 30k you put into it for lifetime, and death benefit 105%. Parents are quite enamored with the idea and are even consider selling away property and pump money into it Seeking opinion on this idea of "generating" money

 

[BBCWatcher]

Just some details about this: Mum has been diagnosed with terminal illness, dad just happens to be 55 and can withdraw some CPF(80K without pledging property).

I’m sorry to hear that.

Recently parents went to NTUC and agent told them they they can buy those insurance plan without any health check-up, will pay out 100/month for each 30k you put into it for lifetime, and death benefit 105%.

There might not be any health check-up, but there is almost surely a health declaration. Lying on a health declaration, or omitting a material fact, is insurance fraud. Not recommended!

However, assuming the health declaration is truthfully made (or not required), and assuming the insurance carrier still agrees to the policy/investment plan, normally the monthly payouts are subtracted from the 105% death benefit. Your father’s CPF money is likely earning 4% (since that’s where first dollars come from), for comparison.

 

[BBCWatcher]

FYI, here’s a link to NTUC’s standard/universal application form. Declaration #2 suggests that she must disclose her terminal illness diagnosis to NTUC Income. If NTUC Income then agrees to the policy, OK, but I doubt they would.

 

[JuniorLion]

Please ask the agent to give the name of the Policy Plan.

 

[havetheveryfun]

Not sure if I phrased the title correctly. Just some details about this: Mum has been diagnosed with terminal illness, dad just happens to be 55 and can withdraw some CPF(80K without pledging property). Recently parents went to NTUC and agent told them they they can buy those insurance plan without any health check-up, will pay out 100/month for each 30k you put into it for lifetime, and death benefit 105%. Parents are quite enamored with the idea and are even consider selling away property and pump money into it Seeking opinion on this idea of "generating" money

so they are doing it for you ? or for themselves ?

100/month for each 30k... i think CPF life can do a better job or at least similar.

 

[BBCWatcher]

100/month for each 30k... i think CPF life can do a better job or at least similar.

No, the idea here is to pony up $30K per unit and nearly immediately collect $31.5K (105% payout) per unit when the spouse with the terminal illness dies. If you’re going to have a terminal illness, generating a near instantaneous 5% return is quite nice in the circumstances.

There are at least a couple problems, though:

1. It’s at least very hard to replenish CPF funds that are currently earning 4+% interest. So even if you can get a one-time, near immediate 5% bump, the surviving spouse then bumps along with much less interest after receiving the insurance payout. CPF SA funds are not a good source for these purposes.

2. The terminal illness must be disclosed to the carrier, as far as I can tell. And I don’t think this varies with policy/plan. It’s in the standard declarations that go along with any policy, as I read it. (Link upthread.) The carrier is then unlikely to issue the policy/plan.

 

[havetheveryfun]

No, the idea here is to pony up $30K per unit and nearly immediately collect $31.5K (105% payout) per unit when the spouse with the terminal illness dies. If you’re going to have a terminal illness, generating a near instantaneous 5% return is quite nice in the circumstances.

There are at least a couple problems, though:

1. It’s at least very hard to replenish CPF funds that are currently earning 4+% interest. So even if you can get a one-time, near immediate 5% bump, the surviving spouse then bumps along with much less interest after receiving the insurance payout. CPF SA funds are not a good source for these purposes.

2. The terminal illness must be disclosed to the carrier, as far as I can tell. And I don’t think this varies with policy/plan. It’s in the standard declarations that go along with any policy, as I read it. (Link upthread.) The carrier is then unlikely to issue the policy/plan.

Yes, so CPF life is better with the problems you have stated for the policy.

the 5% is nothing, he is obviously more focused on the 100/month.

now fixed deposits are already reaching 2%. There are already 1.8% fixed deposits currently in the market . All you need to do is to survive 3 years and you would already beat the 5% payout (1.8% x 3 years = 5.4%) and you already beat the death benefit returns of the policy. Even if she doesn't survive a year, how much can she pump money into the policy ? 500k after selling the whole apartment .. just for a 25k returns ? 25k can't even last a year or compare to the security of having a house to stay in at old age.

so, only the 100/month for the policy is worth talking about, as it's for lifetime.

 

[xtwis7]

Very sorry to hear about your situation TS. No harm trying but please declare the Terminal Illness diagnosis. Even if there’s no medical, insurers may not accept the case since it’s alr with certainty that the unfortunate event will happen within 12 mths.

And please try to dissuade them from selling property to do so, even if the plan can be bought.

 

[Extech]

Very sorry to hear about your situation TS. No harm trying but please declare the Terminal Illness diagnosis. Even if there’s no medical, insurers may not accept the case since it’s alr with certainty that the unfortunate event will happen within 12 mths.

And please try to dissuade them from selling property to do so, even if the plan can be bought.

Yupp declared. Can still buy, but death bonus is only 101%. Managed to persuade my parents not to sell property!

 

[Extech]

I’m sorry to hear that.


There might not be any health check-up, but there is almost surely a health declaration. Lying on a health declaration, or omitting a material fact, is insurance fraud. Not recommended!

However, assuming the health declaration is truthfully made (or not required), and assuming the insurance carrier still agrees to the policy/investment plan, normally the monthly payouts are subtracted from the 105% death benefit. Your father’s CPF money is likely earning 4% (since that’s where first dollars come from), for comparison.

No, the idea here is to pony up $30K per unit and nearly immediately collect $31.5K (105% payout) per unit when the spouse with the terminal illness dies. If you’re going to have a terminal illness, generating a near instantaneous 5% return is quite nice in the circumstances.

There are at least a couple problems, though:

1. It’s at least very hard to replenish CPF funds that are currently earning 4+% interest. So even if you can get a one-time, near immediate 5% bump, the surviving spouse then bumps along with much less interest after receiving the insurance payout. CPF SA funds are not a good source for these purposes.

2. The terminal illness must be disclosed to the carrier, as far as I can tell. And I don’t think this varies with policy/plan. It’s in the standard declarations that go along with any policy, as I read it. (Link upthread.) The carrier is then unlikely to issue the policy/plan.

Thanks BBCwatcher gorgor! This one is on top of BRS so only earning 2.5% oh

 

[Extech]

so they are doing it for you ? or for themselves ?

100/month for each 30k... i think CPF life can do a better job or at least similar.

For my mum

end of the day returns will be hovering between 3.4-4.5%, taking into account the monthly

CPF life only kicks in at 65. Time is a consideration here as my mum is only one year older then SG

 

[Extech]

Yes, so CPF life is better with the problems you have stated for the policy.

the 5% is nothing, he is obviously more focused on the 100/month.

now fixed deposits are already reaching 2%. There are already 1.8% fixed deposits currently in the market . All you need to do is to survive 3 years and you would already beat the 5% payout (1.8% x 3 years = 5.4%) and you already beat the death benefit returns of the policy. Even if she doesn't survive a year, how much can she pump money into the policy ? 500k after selling the whole apartment .. just for a 25k returns ? 25k can't even last a year or compare to the security of having a house to stay in at old age.

so, only the 100/month for the policy is worth talking about, as it's for lifetime.

Hard to survive 3 years Median lifespan from point of dignosis is 18 months

 

[Extech]

Not sure if I phrased the title correctly. Just some details about this: Mum has been diagnosed with terminal illness, dad just happens to be 55 and can withdraw some CPF(80K without pledging property). Recently parents went to NTUC and agent told them they they can buy those insurance plan without any health check-up, will pay out 100/month for each 30k you put into it for lifetime, and death benefit 105%. Parents are quite enamored with the idea and are even consider selling away property and pump money into it Seeking opinion on this idea of "generating" money

Thanks all that replied!In the end went ahead and bought an NTUC ILP。 Entered with 90k, Front load 3%. Now monthly taking about 300ish!

 

[Mecisteus]

Thanks all that replied!In the end went ahead and bought an NTUC ILP。 Entered with 90k, Front load 3%. Now monthly taking about 300ish!

Ouch such a lemon product?

 

[Extech]

Ouch such a lemon product?

Parents are happy with it Unless you have alternate product to recommend?

 

[dexboi]

You can never profit from an insurance policy. Read the TnCs again, if you have any doubts feel free to post them here and we can help you accordingly. Don't rely on agents to sell you their story. ILPs have NEVER break-even in just 5yrs.

Your 14 days of free-look (terminate without penalty) starts from the day you receive the policy documents. Good luck.