Another ILP Case...

[xjapanhide0]

Hi all hwz users,

I am currently in the midst of deciding whether to cancel my ILP or keep it. I have been reading through and researching a bit but would like more feedbacks and opinions! Please do share with me your take.

Last time not as financially savvy, just called to get the plan details. Agent wasn't too pleased with my lowering of premium hahaha.

-Case study details-
ILP plan with $100k coverage for death, TPD and CI
Initial premium amount - $257/mth

Current cash/surrender value - $2.3/2.7 as of now
Plan will reach the 4th year starting this October 2015
I am currently 24yrs old.
I recently lowered the premium to $100 as it provides the same amount of coverage and frees up my cashflow to do other better stuff (i.e invest directly via philips securities etc. or other cash generating opportunities)

-Question-
1) I am currently thinking whether it will cost me more to keep the plan and continue paying, or cancel it and invest the rest/business/cash generating opportunities and buy term?

2) Insurance is for people with dependents. Currently at 24yo, i dont have any dependents whatsoever thus i dont really see the need for insurance coverage currently as well. Is my thinking going to cost me more in the long run(because grow older, insurance cost is more ex) or the amount i free up during this period till i have actual need to get insurance coverage and put it into more lucrative opportunities better?

I do have hospitalization plan though as i believe that is a MUST for any age bracket.

Do feedback and share your thoughts please!

 

[Shiny Things]

-Question-
1) I am currently thinking whether it will cost me more to keep the plan and continue paying, or cancel it and invest the rest/business/cash generating opportunities and buy term?

Cancel it and buy term. Axa's quoting me about $22 a month for $100k of term-life-to-65 with TPD and CI, assuming you're a non-smoker. That's a lot better than the $100 a month you're paying into your ILP for the same coverage.

2) Insurance is for people with dependents. Currently at 24yo, i dont have any dependents whatsoever thus i dont really see the need for insurance coverage currently as well.

Yep, this is right.

Is my thinking going to cost me more in the long run(because grow older, insurance cost is more ex) or the amount i free up during this period till i have actual need to get insurance coverage and put it into more lucrative opportunities better?

This whole "you should buy insurance when you're young, because it costs more when you're older" is sort of a marketing trick. If you buy the insurance when you're young, the annual cost is lower, but you end up paying nearly as much over the life of the contract because you're paying for a longer time.

Also, insurers want healthy young people in their insured pool, because you guys are much less likely to claim on your policies. If you're buying insurance when you're young, you're subsidising payouts to old people.

I do have hospitalization plan though as i believe that is a MUST for any age bracket.

Yep, absolutely right.

 

[Darkzi0n]

Working parents without adequate retirement fund are considered dependents too.

 

[Xaser74]

Working parents without adequate retirement fund are considered dependents too.

Got gov taking care of them. No need worry.

 

[Perisher]

Got gov taking care of them. No need worry.

What?

 

[Mecisteus]

Cancel it and buy term. Axa's quoting me about $22 a month for $100k of term-life-to-65 with TPD and CI, assuming you're a non-smoker. That's a lot better than the $100 a month you're paying into your ILP for the same coverage.



Yep, this is right.



This whole "you should buy insurance when you're young, because it costs more when you're older" is sort of a marketing trick. If you buy the insurance when you're young, the annual cost is lower, but you end up paying nearly as much over the life of the contract because you're paying for a longer time.

Also, insurers want healthy young people in their insured pool, because you guys are much less likely to claim on your policies. If you're buying insurance when you're young, you're subsidising payouts to old people.



Yep, absolutely right.

the marketing gimmick is absolutely true. alot of people fall for it.

babies were also recommended to buy a Whole Life / ILP?! agents are more than happy to serve kiasu parents.

the best and lowest cost of investment gift to your child is to buy a few k of STI ETF shares.

 

[Xaser74]

When couple get old, can downgrade to 2 room flat after selling their 4 room flat get money for daily expenditure + cpf life mthly payout.

Or another option lease the remaining 30 years to hdb and get monthly S$1.xxk then rent out 1 room get additional income.

And their children already get married own their flat.

So dont worry too much, there always a way out when get old.

Thank you for the good explanation.

 

[starfish.starfish]

Cancel it and buy term. Axa's quoting me about $22 a month for $100k of term-life-to-65 with TPD and CI, assuming you're a non-smoker. That's a lot better than the $100 a month you're paying into your ILP for the same coverage.



Yep, this is right.



This whole "you should buy insurance when you're young, because it costs more when you're older" is sort of a marketing trick. If you buy the insurance when you're young, the annual cost is lower, but you end up paying nearly as much over the life of the contract because you're paying for a longer time.

Also, insurers want healthy young people in their insured pool, because you guys are much less likely to claim on your policies. If you're buying insurance when you're young, you're subsidising payouts to old people.



Yep, absolutely right.

I guess buy insurance while you are healthy is good else a lot of exclusion factors.

 

[Perisher]

When couple get old, can downgrade to 2 room flat after selling their 4 room flat get money for daily expenditure + cpf life mthly payout.

Or another option lease the remaining 30 years to hdb and get monthly S$1.xxk then rent out 1 room get additional income.

And their children already get married own their flat.

So dont worry too much, there always a way out when get old.

I think in Asia, when parents raise kids and they die before you, the least that one could do is leave behind a sum of $$ so that parent's life won't be disrupted.

The elderly might not be able to accept these drastic changes to their life. Please spare a thought for the parents. But ya, the 2 options works.

 

[joshua182]

the marketing gimmick is absolutely true. alot of people fall for it.

babies were also recommended to buy a Whole Life / ILP?! agents are more than happy to serve kiasu parents.

the best and lowest cost of investment gift to your child is to buy a few k of STI ETF shares.

Yes. Only the aged and sick should buy insurance.

-.-"

Where u think the payouts gonna come from huh? Thin air?

 

[Shiny Things]

I think in Asia, when parents raise kids and they die before you, the least that one could do is leave behind a sum of $$ so that parent's life won't be disrupted.

The elderly might not be able to accept these drastic changes to their life. Please spare a thought for the parents. But ya, the 2 options works.

So yeah, this is true. I'm a mouthy angmoh who thinks that giving all your spare change to your parents is sort of weird. Your parents should be saving their own money for their own retirement. Take care of yourself first, and all that.

I mean, if your parents are dead broke and you're the only thing standing between them and homelessness, then obviously you step in and make sure they're OK. But if your parents have worked 40 years at a decent job with a phat CPF payment, then you shouldn't need to hand them 50% of your takehome just because you feel obliged to.

I dunno, maybe the end result is the same, but... my parents are doing OK, and I don't feel any need to wire them great sums of cash. I treat them to the occasional holiday because it's the nice thing to do, but I'm not sending them thousands of dollars a month or anything.

 

[Shiny Things]

the marketing gimmick is absolutely true. alot of people fall for it.

babies were also recommended to buy a Whole Life / ILP?! agents are more than happy to serve kiasu parents.

the best and lowest cost of investment gift to your child is to buy a few k of STI ETF shares.

And this! Why are parents buying whole-life policies for their children? You're giving your kids a big bundle of... hundred-dollar-a-month payments to the insurance company. That's not giving your kids a gift; that's just mean.

 

[limster]

Yes. Only the aged and sick should buy insurance.

-.-"

Where u think the payouts gonna come from huh? Thin air?

Mike was agreeing with Shiny Things and adding you should buy STI ETF for children, not WL/ILP. Nowhere does he say that only aged and sick should buy insurance. I agree with him 100%.

I guess you are just trolling.

 

[Mecisteus]

Yes. Only the aged and sick should buy insurance.

-.-"

Where u think the payouts gonna come from huh? Thin air?

if you really need, buy the pure insurance then. not some bundled insurance packages.

i think a few cents for a 10k term coverage for a child.

 

[Mecisteus]

Yes. Only the aged and sick should buy insurance.

-.-"

Where u think the payouts gonna come from huh? Thin air?

you dont need to be sarcastic.

lets face the truth. WL/ILP are popular here because buyers have the mindsets that buying term insurance is a loss as they dont get any surrender value in the future.

the surrender value from those policies dont come from thin air. they are cummulated and invested money (premium - cost of insurance) over the years.

insurance companies objective is to maximize profits for their shareholders. do you think they will care about maximizing your bonuses?

 

[Perisher]

So yeah, this is true. I'm a mouthy angmoh who thinks that giving all your spare change to your parents is sort of weird. Your parents should be saving their own money for their own retirement. Take care of yourself first, and all that.

I mean, if your parents are dead broke and you're the only thing standing between them and homelessness, then obviously you step in and make sure they're OK. But if your parents have worked 40 years at a decent job with a phat CPF payment, then you shouldn't need to hand them 50% of your takehome just because you feel obliged to.

I dunno, maybe the end result is the same, but... my parents are doing OK, and I don't feel any need to wire them great sums of cash. I treat them to the occasional holiday because it's the nice thing to do, but I'm not sending them thousands of dollars a month or anything.

Yeah, Asian perspective.
What I meant was after one is dead. Leave them a sum to settle things.
Another thing is, our parent's generation doesn't know much about investing and savings... CPF might not be enough.

This generation though...

 

[Darkzi0n]

So yeah, this is true. I'm a mouthy angmoh who thinks that giving all your spare change to your parents is sort of weird. Your parents should be saving their own money for their own retirement. Take care of yourself first, and all that.

I mean, if your parents are dead broke and you're the only thing standing between them and homelessness, then obviously you step in and make sure they're OK. But if your parents have worked 40 years at a decent job with a phat CPF payment, then you shouldn't need to hand them 50% of your takehome just because you feel obliged to.

I dunno, maybe the end result is the same, but... my parents are doing OK, and I don't feel any need to wire them great sums of cash. I treat them to the occasional holiday because it's the nice thing to do, but I'm not sending them thousands of dollars a month or anything.

it is the parents' responsibility to save for their own retirement, but it is also the responsibility of the children to take care of their parents when they are old.

not every parents worked for 40 years with decent jobs.

and giving them 50% take home pay because u feel obliged to is different from supporting them when they r financially vulnerable.

 

[xjapanhide0]

thank you for the feedbacks!

Wow, i can't believe axa quoted you that rate @$22/mth. including 100k coverage for Death, 100k for TPD, 100k for CI?

i guess i have sort of finalized my decision which is to.....do full surrender haha.

So for regular savings, would be best to invest into unit trust, ETF via phillips?

Or wait for impending financial crisis and buy undervalued stocks?

 

[Shiny Things]

Wow, i can't believe axa quoted you that rate @$22/mth. including 100k coverage for Death, 100k for TPD, 100k for CI?

Yep, as far as I can see. I just went to the AXA direct-purchase website right here and got a quote; don't forget to pick "term", not "whole of life".

Incidentally, if you want to BLOW YOUR MIND, go to that website and compare a $100k "whole of life, premium to age 70" policy with a $100k "term to 65" policy. It's nearly 90% cheaper to buy the term life policy, like $275 a year vs $2200 a year for a 24-year-old non-smoker.

And here's something that will REALLY blow your mind. That $1900 a year difference, if you invested it every year until you turn 70, and you got a reasonable 5% return on it, adds up to over four hundred thousand dollars.

Which would you rather have when you retire: a $100,000 whole-life policy? Or $400,000 in the bank?

i guess i have sort of finalized my decision which is to.....do full surrender haha.

So for regular savings, would be best to invest into unit trust, ETF via phillips?

ETFs only, not unit trusts; and don't use Phillips. Stanchart is a lot better and a lot cheaper.

Or wait for impending financial crisis and buy undervalued stocks?

There is no "impending financial crisis". If you're waiting for another 2008, you could be waiting an awfully long time.

That said, Singaporean stocks are pretty cheap right now, because all the idiot investors in the rest of the world have sold off everything with even a hint of "banks" or "emerging markets" in it. Local investors: your market's cheap right now. Take advantage of it!

 

[wts2013]

Yep, as far as I can see. I just went to the AXA direct-purchase website right here and got a quote; don't forget to pick "term", not "whole of life".

Incidentally, if you want to BLOW YOUR MIND, go to that website and compare a $100k "whole of life, premium to age 70" policy with a $100k "term to 65" policy. It's nearly 90% cheaper to buy the term life policy, like $275 a year vs $2200 a year for a 24-year-old non-smoker.

And here's something that will REALLY blow your mind. That $1900 a year difference, if you invested it every year until you turn 70, and you got a reasonable 5% return on it, adds up to over four hundred thousand dollars.

Which would you rather have when you retire: a $100,000 whole-life policy? Or $400,000 in the bank?



ETFs only, not unit trusts; and don't use Phillips. Stanchart is a lot better and a lot cheaper.



There is no "impending financial crisis". If you're waiting for another 2008, you could be waiting an awfully long time.

That said, Singaporean stocks are pretty cheap right now, because all the idiot investors in the rest of the world have sold off everything with even a hint of "banks" or "emerging markets" in it. Local investors: your market's cheap right now. Take advantage of it!

hahaha, I've put your figures into the internet calculator,

$400k vs 100k, are u sure?

see the results here http://forums.hardwarezone.com.sg/96686911-post79.html