Am I over insured?

[ngsngn]

Hi people, need your advice here, signed up the following plans 1yr ago in 2012 before my 25yr birthday. After paying 1yr of premium, which amounts to approximately

$4k per year, feeling the heart pain as it is 15% of annual income. Read from forum here sometime back that the ideal % should be 10% of annual income.

Also I am paying both of my parents annual hospitalization premium of cash $535 per year per pax (PruShield Extra (A Premier)).

So in annual about $5k cash gone, kinda heart pain.


Therefore want to ask if any below here should be removed? don't mind losing 1yr of premiums paid. I know hospitalization is a must, therefore not removing it.


Whole Life / Term Life Plan:
-------------------------------------------

Company: Great Eastern
Plan: Supreme Living Term
Sum Assured: $100k
Annual Premium: $424
Policy Term, Payable for: 60years
Age of next birthday: 25

----------------------------------

Company: Great Eastern
Plan: Supreme Protect 20 (Limited Pay)
Sum Assured: $100k
Annual Premium: $1999
Policy Term: Whole of Life
Payable for: 20years
Age of next birthday: 25

+

Company: Great Eastern
Plan: Supreme Protect PLUS (Limited Pay 20)
Sum Assured: $100k
Annual Premium: $692
Rider Term: Whole of Life
Payable for: 20years
Age of next birthday: 25

+

Company: Great Eastern
Plan: AccidentCare Plus II Rider
Occupational Class: 1
Annual Premium: $165.85
Premium Term: 51years
Age of next birthday: 25

+

Company: Great Eastern
Plan: AccidentCare II
Occupational Class: 1
Amount of benefits: $200k
Annual Premium: $90.20
Premium Term: 51years
Age of next birthday: 25

+

Company: Great Eastern
Plan: LifeSecure Rider
Sum Assured monthly: $2k
Annual Premium: $212
Premium Term: Up to age 65
Age of next birthday: 25

----------------------------------

Company: Aviva (SAF)
Plan: Group Term Life Policy
Sum Assured: $100k
Annual Premium: $12.80 * 12 = $153.60
Payable for: Up to age 65
Age of next birthday: 26



Hospitalization
-------------------------------------------
Company: Prudential
Plan: PruShield Extra (A Premier)
Annual Premium: $288


Appreciate the advice given.

Thanks.

 

[lifeishard]

you really love your GE agent lol...if u want to cut cost,i suggest u get rid of the GE living term or the aviva saf term.get rid of accident care rider and lifesecure rider?

 

[lzydata]

This is the handiwork of an enthusiastic GE agent who has ignored your real-world budget constraints.

Disagree with above advice to stop the term policies. They are the most cost-effective for pure protection. The whole life policy Supreme Protect 20 is taking up almost half of the premium and it is the least cost-effective. Could you downgrade this to maybe $50k sum assured? Then you can still be covered for life and build up your savings, but free up $1k a year. After that, I would target the accident insurance.

 

[ngsngn]

Hi All, I am actually looking at 200k coverage when buying GE that time. I only took up Aviva after the purchase of the GE plans. I dropped the Aviva after I ORD as that time I haven't think about insurance yet. After the air force guy incident, Aviva offered again, which I duly take up. However, I understand Aviva is only until 65yrs which then the premium will change. Correct me if I am wrong here.

The reason I took up Whole life is because if I become poor in 60s or 70s and unable to continue my Term payment til 85yrs old for GE Living Term, as least I have a 100k Whole life to fall back on.

Can anyone here advise me on the Whole life or CI plan with Whole life? Kinda confused out here.

 

[Carnesir]

not sure about your committments but i always tink one should take the Holy Trinity: i will start with the most important first. Disclaimer: i reduce cash output to the maximum cause i do investing by myself.

1.Medical insurance: cover all hospitalisation expenses. Any accident or sudden events can wipe off massive amounts of savings you have. multiple surgeries, visits to specialist and medicine can make u weep if your not covered sufficiently.

Pros: most can be paid using MEdisave, i have upgraded to enhanced medishield with no rider as it requires cash. i am currently paying almost 800 per year coverage for me and my dad combined.
Cons: None. why not use money you cant touch anyway?

2.Life Insurance: Cover for Critical Illness, death, permanent disability with Minimum Sum guaranteed. This is part savings, part salary supplement supposed your deceased but have limitations due to accidents or contracted terminal illness. the coverage is solely to cover medical treatments and therapy for any unfortunate events that happen that will impair the quality of life of your loved ones for the foreseeable future.

3.Term for coverage for dependents: only purchase when u have dependents. meaning only pay when your death results in hardship for pple who depend on your salary, ie, either in the near future or next 5-10 years. a rule of thumb is take your current annual salary times 3-5 years and ask for term coverage for that sum.

Dun take up the rest, especially those cheem cheem mumbo jumbo plans such as Investment Linked plans or sort of stuff, these will screw up your cashflow in the foreseeable future. It has been proven for many times that fund managers rarely outperform blue chip stocks in market indices over a long period of time. and we wonder why we pay them management fees. Free up the money you would have paid into other instruments... UNLESS you lazy to do read up on investment or cannot control spending, then oh ya, put in ilp is better then buying the latest iphone5/6/7/8/8 every half yr or the newest gucci/prada/bottega/hermes.

Taking these 3, with the bulk of them being in Life insurance, should only set you back up to MAXIMUM 15% of your annual salary, depending on your medical history, and dependents. do a review with your planner every 3 years to make sure your financial objectives are in line with the policies that you have.

and btw, get rid of your agent. i tink he/she might have earned a handsome sum of money out of you without giving u proper advice. this is the industry norm. finding one good agent is as hard as finding a life long friend.

Good luck with your financial planning!

 

[hwmook]

not sure about your committments but i always tink one should take the Holy Trinity: i will start with the most important first. Disclaimer: i reduce cash output to the maximum cause i do investing by myself.

1.Medical insurance: cover all hospitalisation expenses. Any accident or sudden events can wipe off massive amounts of savings you have. multiple surgeries, visits to specialist and medicine can make u weep if your not covered sufficiently.

Pros: most can be paid using MEdisave, i have upgraded to enhanced medishield with no rider as it requires cash. i am currently paying almost 800 per year coverage for me and my dad combined.
Cons: None. why not use money you cant touch anyway?

2.Life Insurance: Cover for Critical Illness, death, permanent disability with Minimum Sum guaranteed. This is part savings, part salary supplement supposed your deceased but have limitations due to accidents or contracted terminal illness. the coverage is solely to cover medical treatments and therapy for any unfortunate events that happen that will impair the quality of life of your loved ones for the foreseeable future.

3.Term for coverage for dependents: only purchase when u have dependents. meaning only pay when your death results in hardship for pple who depend on your salary, ie, either in the near future or next 5-10 years. a rule of thumb is take your current annual salary times 3-5 years and ask for term coverage for that sum.

Dun take up the rest, especially those cheem cheem mumbo jumbo plans such as Investment Linked plans or sort of stuff, these will screw up your cashflow in the foreseeable future. It has been proven for many times that fund managers rarely outperform blue chip stocks in market indices over a long period of time. and we wonder why we pay them management fees. Free up the money you would have paid into other instruments... UNLESS you lazy to do read up on investment or cannot control spending, then oh ya, put in ilp is better then buying the latest iphone5/6/7/8/8 every half yr or the newest gucci/prada/bottega/hermes.

Taking these 3, with the bulk of them being in Life insurance, should only set you back up to MAXIMUM 15% of your annual salary, depending on your medical history, and dependents. do a review with your planner every 3 years to make sure your financial objectives are in line with the policies that you have.

and btw, get rid of your agent. i tink he/she might have earned a handsome sum of money out of you without giving u proper advice. this is the industry norm. finding one good agent is as hard as finding a life long friend.

Good luck with your financial planning!

I don't see how your 2. is not overlapping with 1 and 3. If you are not dead, 1 will cover. If you are dead, 3 will cover. 2 is totally redundant. As the general advise goes, buy term invest the rest.

 

[Carnesir]

I don't see how your 2. is not overlapping with 1 and 3. If you are not dead, 1 will cover. If you are dead, 3 will cover. 2 is totally redundant. As the general advise goes, buy term invest the rest.

Then if kena ci how？alot of medical bills to settle unless then allows accelerated payout but it defeats the purpose of providing a payout to sustain the lifestyle of dependents in te short term...

 

[hhanzorion]

Hi people, need your advice here, signed up the following plans 1yr ago in 2012 before my 25yr birthday. After paying 1yr of premium, which amounts to approximately

$4k per year, feeling the heart pain as it is 15% of annual income. Read from forum here sometime back that the ideal % should be 10% of annual income.

Also I am paying both of my parents annual hospitalization premium of cash $535 per year per pax (PruShield Extra (A Premier)).

So in annual about $5k cash gone, kinda heart pain.


Therefore want to ask if any below here should be removed? don't mind losing 1yr of premiums paid. I know hospitalization is a must, therefore not removing it.


Whole Life / Term Life Plan:
-------------------------------------------

Company: Great Eastern
Plan: Supreme Living Term
Sum Assured: $100k
Annual Premium: $424
Policy Term, Payable for: 60years
Age of next birthday: 25

----------------------------------

Company: Great Eastern
Plan: Supreme Protect 20 (Limited Pay)
Sum Assured: $100k
Annual Premium: $1999
Policy Term: Whole of Life
Payable for: 20years
Age of next birthday: 25

+

Company: Great Eastern
Plan: Supreme Protect PLUS (Limited Pay 20)
Sum Assured: $100k
Annual Premium: $692
Rider Term: Whole of Life
Payable for: 20years
Age of next birthday: 25

+

Company: Great Eastern
Plan: AccidentCare Plus II Rider
Occupational Class: 1
Annual Premium: $165.85
Premium Term: 51years
Age of next birthday: 25

+

Company: Great Eastern
Plan: AccidentCare II
Occupational Class: 1
Amount of benefits: $200k
Annual Premium: $90.20
Premium Term: 51years
Age of next birthday: 25

+

Company: Great Eastern
Plan: LifeSecure Rider
Sum Assured monthly: $2k
Annual Premium: $212
Premium Term: Up to age 65
Age of next birthday: 25

----------------------------------

Company: Aviva (SAF)
Plan: Group Term Life Policy
Sum Assured: $100k
Annual Premium: $12.80 * 12 = $153.60
Payable for: Up to age 65
Age of next birthday: 26



Hospitalization
-------------------------------------------
Company: Prudential
Plan: PruShield Extra (A Premier)
Annual Premium: $288


Appreciate the advice given.

Thanks.

Great Coverage proposed by the agent.

But, not economical.

Suggested Policy:

1. Smart Protect (ILP)
SA: 250,000
Premium: 2400 odd per year
2. Accident Plan
SA: 200,000
Premium: 480 odd per year
3. Integrated Shield Plan (100%)
Premium: 300 odd per year
4. Critical Illness Early-pay out or Paysecure
SA: 200k to 400k
Premium: 800-1000 per year


WHY IS IT ALL RIDER. If main policy lapse, thats it.

For your parents, you need to consider getting some Integrated Shield Plan that allows you to downgrade along the years. For Prudential, you cant downgrade. It will be a pain in the later years to pay premium for your aging parents for Private Hospital Coverage

 

[jaster7]

Some good advice in the replies you have got so far.

For me, I personally feel that you have to know what an insurance is for, exactly. And buy insurance for the right reason, not just to feel good/safe, or to be "protected". You don't buy insurance to protect yourself, you buy insurance to help others (ie. family members)

I find your reason for buying insurance might be a bit flawed:

The reason I took up Whole life is because if I become poor in 60s or 70s and unable to continue my Term payment til 85yrs old for GE Living Term, as least I have a 100k Whole life to fall back on.

What do you mean "at least 100k Whole life to fall back on"? What is there to fall back on? Do you mean you can cancel the insurance and take out whats left of the insurance cash value when you are poor in your old age? Or do you mean that 100k paid to your estate, when you are dead, is a good backup? And what is it a backup for?

Both are a bit flawed. The cash value you have left is likely to be a very small amount, relatively, and you would have had better returns and liquidity in other forms of investments. And the 100k paid to your estate is very likely unneeded by your dependants (who are most likely your children, who would have already grown up and working full-time). Ya, leaving them some inheritance is good, but is it really necessary (die die must have)? If not, well, you may have wasted good money and liquidity and possibly opportunity costs throughout your life because of that "100k Whole life to fall back on".

I would suggest you go and read this

Part 3. ...

in the forum. Start with part 3 and part 5, then read the rest if you are interested in more. (can't post link, so you need to go to that article using the link in the quote.)

You need to fully understand what each kind of insurance product is for, what you need to insure against (based on your current situation and likely situation in the future), and I think most important of all -- flexibility. Don't get locked into something that you are not 100% comfortable in. Change is the only constant in the world. Include flexibility in your plan. Insurance products are long term, so in order to find the best combination of insurance products, you need to plan long term too.

Lastly, whether you are over-insured, or under-insured, is entirely dependent on your personal situation and objectives. You need to first know what you need, how much you need, then you will automatically know if you are under or over.

I'm not in the financial/insurance industry, so I also spent a lot of time reading and understanding insurance last time. Comparing arguments in forums and forming my own views on insurance. Only you know what you require, even if you don't know it yet.

 

[FP_IFA]

IMHO, I think GE living term and SAF term should be keep. I like lifesecure but it is unfortunately tied to the whole life plan.

The plan I think is overly priced is the life plan and the accident TPD rider attached to it.

I am not against having a whole life plan, just that the GE whole life plan is expensive for just 100k death. TPD and CI.

 

[teryho]

Consider:

1. Does your Employer Company cover any insurance for you right now? Some Company cover 100% hospitalization bill and most of out patient tratement for the employer's family.

2. When you grow old, does the current 4K/Year payment remain the same or could be increased.

Mathematically, Whole life insurance is one of worst return on investment aspect.

 

[Sirloinsteak]

Then if kena ci how？alot of medical bills to settle unless then allows accelerated payout but it defeats the purpose of providing a payout to sustain the lifestyle of dependents in te short term...

Bro,
Term policy also have CI

 

[ngsngn]

Some good advice in the replies you have got so far.

For me, I personally feel that you have to know what an insurance is for, exactly. And buy insurance for the right reason, not just to feel good/safe, or to be "protected". You don't buy insurance to protect yourself, you buy insurance to help others (ie. family members)

I find your reason for buying insurance might be a bit flawed:

What do you mean "at least 100k Whole life to fall back on"? What is there to fall back on? Do you mean you can cancel the insurance and take out whats left of the insurance cash value when you are poor in your old age? Or do you mean that 100k paid to your estate, when you are dead, is a good backup? And what is it a backup for?

Both are a bit flawed. The cash value you have left is likely to be a very small amount, relatively, and you would have had better returns and liquidity in other forms of investments. And the 100k paid to your estate is very likely unneeded by your dependants (who are most likely your children, who would have already grown up and working full-time). Ya, leaving them some inheritance is good, but is it really necessary (die die must have)? If not, well, you may have wasted good money and liquidity and possibly opportunity costs throughout your life because of that "100k Whole life to fall back on".

Hi jaster7,

The reason for the 100k for Whole life is that I do not want to burden my kids, as they perhaps have their own family problem to worry about next time. Kinda don't wana be a burden to next generation.

 

[ngsngn]

Hi All,

Read your advice/opinions. I sincerely appreciate it.

Looks like the Whole life plan is really not worth it. I will take that into consideration. Btw, if I do drop my Whole Life, is it viable to increase GE Term to 200k or Aviva to 200k or another Term from some other coys?

Thanks.

 

[lzydata]

As I said you may not have to cancel the $100k whole life policy outright, just change it to a $50k sum assured one so that your premiums are lower. I suppose it should be possible to arrange since the company would rather still do some business with you than lose you entirely.

In this way you will still have coverage for life. Also, since it is a participating policy, together with accumulated and terminal bonuses, whether you are claiming or cashing out, it should be worth more than $50k in future.

You should also try to estimate how much you would have from CPF and your own investments. If you are working I think you should not feel like you have to rely on a single policy to get you through your later years.

 

[ngsngn]

Also, since it is a participating policy, together with accumulated and terminal bonuses, whether you are claiming or cashing out, it should be worth more than $50k in future.

Sorry, I don't get what you mean by it is participating policy? Isn't the payout fixed?

You should also try to estimate how much you would have from CPF and your own investments. If you are working I think you should not feel like you have to rely on a single policy to get you through your later years.

I worked for 1+yrs already. You mean later on in life at 30+ or 40+ to get another insurance that suit me?

 

[Motherliquor.P]

Consider:

1. Does your Employer Company cover any insurance for you right now? Some Company cover 100% hospitalization bill and most of out patient tratement for the employer's family.

2. When you grow old, does the current 4K/Year payment remain the same or could be increased.

Mathematically, Whole life insurance is one of worst return on investment aspect.

Most companies does cover 100% of your hospital bill (at least mine does, capped at at a certain value ). However, from what I have gathered (please correct me if I'm wrong) hospitalisation and accident plan stops when you stop being an employee to the company. Therefore, if you have any pre existing conditions (assuming that you gotten this during your previous unemployment) you would not be able to claim in your new company even if the new company is using the same hospitalisation and accident plan.

 

[lzydata]

Sorry, I don't get what you mean by it is participating policy? Isn't the payout fixed?

OK, seriously, your agent should have explained this to you. Or you should have received bonus statements from GE. Look out for them!

A participating policy means it participates in the gains (and losses) of a fund. The insurance company puts everyone's money in a fund and invests it in bonds, stocks, property etc.

Every year, if the fund has done well, the company will add bonuses to your policy. For example, if you have a $100,000 sum assured policy and this year they have a 2% bonus, then your sum assured becomes $102,000. There can also be other bonuses upon maturity or claim.

Term policies are non-participating. Because they are pure protection, there is no savings or investment component, so your sum assured will remain the same.

I don't know the details of your policy, and GE does not put these documents online. So here is a brochure from NTUC Income explaining what bonuses are. Different company but the same concept, and written in plain English.

http://www.income.com.sg/EduMaterials/GuidetoParPolicy.pdf

I worked for 1+yrs already. You mean later on in life at 30+ or 40+ to get another insurance that suit me?

I am referring to what you said here: "The reason I took up Whole life is because if I become poor in 60s or 70s and unable to continue my Term payment til 85yrs old for GE Living Term, as least I have a 100k Whole life to fall back on."

You are not wrong in that if you have a whole life policy and late in life you need the money, you can cash it out. But I think we have to strike a balance between insuring for future risks and possibilities and trying to have a good life in the present.

 

[ngsngn]

You are not wrong in that if you have a whole life policy and late in life you need the money, you can cash it out. But I think we have to strike a balance between insuring for future risks and possibilities and trying to have a good life in the present.

Noted. Am I right to say for me now is should be combination of Term + CI (Early CI or normal CI?) + Hosp (necessity)?

Assuming I am keeping both GE Term and Aviva Term and discard the Whole life + accident + lifesecure (if could not be detach from plan), that means I will not have any CI coverage? I don't think Term covers CI right?

Since my both Term amount to 200k, I should also be looking for CI to cover 200k as well?

 

[jaster7]

Hi jaster7,

The reason for the 100k for Whole life is that I do not want to burden my kids, as they perhaps have their own family problem to worry about next time. Kinda don't wana be a burden to next generation.

Ahh, so, why do you think NOT having the 100k will burden your kids?? Do you have some debt liabilities that you foresee in your old age that you don't want to leave to your kids? Do you think you will be so broke in your old age that you have no savings at all for the final expenses?

If not, then why do you need Whole Life insurance that pays 100k during your retirement days when no one actually needs that payout when you are gone?

So, you have to keep asking yourself: do I need this? why do I need this? without this, what else can I do? how will the situation be if I don't have this?

As mentioned in my previous post, do read the "sticky" thread in this forum titled "Newbie Guide: How to find a good Agent for Investment & Insurance". Especially parts 3 and parts 5 of that thread starter.

Remember, insurance is always an expense. Its just that some products hide the expense by combining with some investments. You should keep insurance expenses to a minimum, while ensuring you are adequately covered for your family needs. Therefore, never get any insurance that you don't absolutely need, just to feel good because everyone(Financial Advisers) says you should have it.