CPF chats

[maple96]

Oh no no...I am more concern with 4-5% computation is it because u are at the tail end of the policy.

I used my own calculation since the calculator provided I am not familiar with.

I have computed based on my surrender value as well since I only basing it purely on guaranteed component and not non guaranteed.

Additionally, if u are not going to show anything by merely stating 4-5% p.a at any given time just doesnt make sense and will misled people. Since I just computed mine at year 7th ,no where near positive.

My main intention is just to confirm is it because u are at the tail end..or ur policy is that great that they give u 4-5% or u are also computing based on a long horizon. Whether u are right or not in your computation remains to be seen.

To be Frank, my full time work requires me to compute returns daily. Hence I am relatively good at it.

Now this thread become Insurance chat

Very often, service providers and most people will tell u that investments is for the long term, just dca over the long term and dun always look at it so your emotions will not be affected, markets will always recover and go up, and u will be rewarded in the long term.

Key word = long term.

Insurers will tell u that buying life insurance is a long term commitment. Buy what u can afford to pay over the long term is important as early termination will result in a heavy penalty.

So why u can blindly dca, dun look so your emotions will not be affected, and wait some 20 years to see if u can reap the fruits of your labour?

But simply cannot do the same with your life insurance or endowment policies? Why must u keep checking, and be overcome by emotions and impatience that your policies are losing money in the earlier years?

U dunno what u dunno? It takes time for the policies to breakeven, once it breakout, u will see the rewards over the long term and when your policies mature? ( that's how mine work with this insurer)

I never look at my policies until 20 years later, my friend told me after 20 years the guaranteed surrender value will jump. My policies are more than 20 years to give me that sort of returns = 4-5% compounded. I have to pay until 85 then my policies are considered “paidup” to cover me for life, ie until death. It is up to me when I want to stop and surrender.

I have endowment policies, some matured, all more than 4% compounded returns. All single premium endowment policies.

I always tell myself, dun buy endowment policies from other insurers if the returns are not at least 2.5% (using CPF OA as benchmark). But sometimes overcome by greed on the spot, bought and regret. But I will still hold it till maturity, I will not lose my capital, only the returns will be lower. Policies which are bought are like 5+5 years. Some compensation upfront like high interest rates on FD or high interest rate savings account or other bundled package.

The worst type of endowment policies are mthly premiums. I never buy.

So know your endowment policies, what is good and what are bad.

 

[yongsaver]

me only buy term nia.

me think when insurance and investment is mixed. the chemistry results in either of the 2 'under' scenarios:

1. under insured or

2. under perform.

sorry me simple minded.....so talk also few liners nia.

not as good as BBC...forum post maciam book chapters.

 

[pcmdan]

Now this thread become Insurance chat

Very often, service providers and most people will tell u that investments is for the long term, just dca over the long term and dun always look at it so your emotions will not be affected, markets will always recover and go up, and u will be rewarded in the long term.

Key word = long term.

Insurers will tell u that buying life insurance is a long term commitment. Buy what u can afford to pay over the long term is important as early termination will result in a heavy penalty.

So why u can blindly dca, dun look so your emotions will not be affected, and wait some 20 years to see if u can reap the fruits of your labour?

But simply cannot do the same with your life insurance or endowment policies? Why must u keep checking, and be overcome by emotions and impatience that your policies are losing money in the earlier years?

U dunno what u dunno? It takes time for the policies to breakeven, once it breakout, u will see the rewards over the long term and when your policies mature? ( that's how mine work with this insurer)

I never look at my policies until 20 years later, my friend told me after 20 years the guaranteed surrender value will jump. My policies are more than 20 years to give me that sort of returns = 4-5% compounded. I have to pay until 85 then my policies are considered “paidup” to cover me for life, ie until death. It is up to me when I want to stop and surrender.

I have endowment policies, some matured, all more than 4% compounded returns. All single premium endowment policies.

I always tell myself, dun buy endowment policies from other insurers if the returns are not at least 2.5% (using CPF OA as benchmark). But sometimes overcome by greed on the spot, bought and regret. But I will still hold it till maturity, I will not lose my capital, only the returns will be lower. Policies which are bought are like 5+5 years. Some compensation upfront like high interest rates on FD or high interest rate savings account or other bundled package.

The worst type of endowment policies are mthly premiums. I never buy.

So know your endowment policies, what is good and what are bad.

now that you mentioned, yeah, sounds like becoming insurance thread.

Ok, so i got it, you are basing what you have received for 20 years horizon. Den is relatively fair.

Since mine is only 7th, a 20th year with the guaranteed portion doesn't fetch me even 3%.

I never like to compare with CPF OA (since there are illiquity involves) and anything that require me to hold for 30th years at 2.5%, is totally no go. If an endowment/WL only provide me with 2.5% after 30 years, i would say no as well. 30 years plan, better off putting in CPF SA which gives 4%.

You r gd at it, that's why u know how to fish good / bad endowment. however, a lot of people on the street doesn't know how to read surrender illustration not to mention computing returns (they are sold off buy the cheap agents on non-guaranteed projections). Hence, to me it is safer to enter into WL rather than endowment.

Limited WL after X years, very likely to break even. IF can hold longer, u usually get more

Hence my suggestion to all young working adults, insurance mandatory to buy are

1. H&S
2. Limited WL (once u have $$)
3. Term life (WL is expensive, you need TL to cover the short fall)

 

[pcmdan]

me only buy term nia.

me think when insurance and investment is mixed. the chemistry results in either of the 2 'under' scenarios:

1. under insured or

2. under perform.

sorry me simple minded.....so talk also few liners nia.

not as good as BBC...forum post maciam book chapters.

Term is cheap. Hence if you are ok with paying all the way till u are 70, sure.

Though i never believe we can work till that age though haha.

My term is referring to those that you have to pay till the day u die (if u stop paying before dying, u get back 0)

If your term is referring to limited WL, den different

 

[pcmdan]

WL non guaranteed portions work the same as endowment isn’t it? Always depending on par fund performance to declare the bonus yearly.

If looking for protection, then yes WL works as it has sum assured in the event smth happens like death etc

But if wanting to use WL as an investment vehicle like endowment, they both works the same way I feel

agree to a certain extend. However, WL is not buy to look at non guaranteed portion. Buying WL should always assess based on guaranteed. Non guaranteed are fluff and should be taken with a pinch of salt.

WL is designed in the way that, when you are young, it protects u...when u are old, the returns will outweigh the sum assured.


Endowment doesn't work that way.

 

[Conor McGregor]

All advice is welcome - what else do I need

Currently have these plans:
Integrated shield
Limited Pay 15 years WL - 1.25 m coverage till age 70 and 250k after 70 (for death, tpd and CI) / early CI 350k
Term 300k for death and tpd till age 85
AIA Solitaire for accidental

 

[BBCWatcher]

All advice is welcome - what else do I need
Currently have these plans:
Integrated shield
Limited Pay 15 years WL - 1.25 m coverage till age 70 and 250k after 70 (for death, tpd and CI) / early CI 350k
Term 300k for death and tpd till age 85
AIA Solitaire for accidental

There are policies in that list you probably don't need, but where's the Disability Income Insurance (DII)?

 

[yongsaver]

Term is cheap. Hence if you are ok with paying all the way till u are 70, sure.

Though i never believe we can work till that age though haha.

My term is referring to those that you have to pay till the day u die (if u stop paying before dying, u get back 0)

If your term is referring to limited WL, den different

Actually buy term and invest the rest is something which I learnt after taking an insurance module 24 years ago in my final uni year. So it has been with me all these years.

Also around that time, my girlfriend (present wife la) bought an investment linked insurance from income (with free MRT card as gift ). About 2-3 years later, the financial crisis hit and I remembered the value tanked a lot. It further cemented my believe to just buy the most insurance u need with as little money as possible and save/invest the rest yourself.

So its more a personal thing till now. Nothing against people buying and selling investment linked policies la.

 

[pcmdan]

Actually buy term and invest the rest is something which I learnt after taking an insurance module 24 years ago in my final uni year. So it has been with me all these years.

Also around that time, my girlfriend (present wife la) bought an investment linked insurance from income (with free MRT card as gift ). About 2-3 years later, the financial crisis hit and I remembered the value tanked a lot. It further cemented my believe to just buy the most insurance u need with as little money as possible and save/invest the rest yourself.

So its more a personal thing till now. Nothing against people buying and selling investment linked policies la.

ILP is never my mandatory insurance to buy.
Anyway, invest yourself only if u know...if u dont know how to invest, u will only panic and lose money if you do.

Hence only do it if one know what he or she is doing. Otherwise is just burning money

Agree that it is a personal thing. The buffet table is wide, how one play with it is individual choice.

 

[maple96]

ILP is never my mandatory insurance to buy.
Anyway, invest yourself only if u know...if u dont know how to invest, u will only panic and lose money if you do.

Hence only do it if one know what he or she is doing. Otherwise is just burning money

Agree that it is a personal thing. The buffet table is wide, how one play with it is individual choice.

Agree.

Actually buy term and invest the rest is something which I learnt after taking an insurance module 24 years ago in my final uni year. So it has been with me all these years.

Also around that time, my girlfriend (present wife la) bought an investment linked insurance from income (with free MRT card as gift ). About 2-3 years later, the financial crisis hit and I remembered the value tanked a lot. It further cemented my believe to just buy the most insurance u need with as little money as possible and save/invest the rest yourself.

So its more a personal thing till now. Nothing against people buying and selling investment linked policies la.

We have never discuss about ILP in this thread so far. Since u raise, let me put things in proper perspective.

In a financial crisis or stock market crash, it is not just your ILP which will tank, your own investments will also tank, especially if u are passive or blindly DCA into ETFs or equity, if u are not savvy enough to exit before the crash or know how to manage it smart,

But a stock market crash or crisis will never tank the guaranteed surrender values of my WL, my retirement nest egg will always be safe!

 

[yongsaver]

Agree.



We have never discuss about ILP in this thread so far.

yep. there is actually difference between WLs and ILPs even though both have investment component. my bad. me sometimes also mix the 2.

 

[maple96]

yep. there is actually difference between WLs and ILPs even though both have investment component. my bad. me sometimes also mix the 2.

Incorrect. Let me define some of different types of life insurance policies, that I know, for purpose of comparison, a simplified definition (idea stolen from a book):

1. Wholelife (tranditional) = protection + surrender values (participating funds)
2. Wholelife (limited pay) = wholelife with less premium payment years
3. Wholelife (multiplier) = wholelife + term
4. Term = protection
5. ILP = term + investment (your own funds/premium)

Can u see the difference between Wholelife (traditional) and ILP?

Wholelife gets surrender values because the premiums are put into the pool of funds owned by the insurer. The insurer needs to make sure their income and sources of funds (ie premiums received) are invested to provide returns to the company plus cushion any claims from the insured. With wholelife, the insurer promised to share some of their returns from the company's investment (ie par funds) with the customers who buy wholelife = surrender values.

 

[yongsaver]

Incorrect. Let me define some of different types of life insurance policies, that I know, for purpose of comparison, a simplified definition (idea stolen from a book):

1. Wholelife (tranditional) = protection + surrender values (participating funds)
2. Wholelife (limited pay) = wholelife with less premium payment years
3. Wholelife (multiplier) = wholelife + term
4. Term = protection
5. ILP = term + investment (your own funds/premium)

Can u see the difference between Wholelife (traditional) and ILP?

Wholelife gets surrender values because the premiums are put into the pool of funds owned by the insurer. The insurer needs to make sure their income and sources of funds (ie premiums received) are invested to provide returns to the company plus cushion any claims from the insured. With wholelife, the insurer promised to share some of their returns from the company's investment (ie par funds) with the customers who buy wholelife = surrender values.

i have a feeling we are splitting hairs here.

one is you have a choice in what to invest and is more risky, the other is insurer does it for u, pooled and invest in some low risk low returns instruments typically high grade investment bonds. to me, both still have investment component. sorry me simple minded therefore look at things more simply.

 

[maple96]

i have a feeling we are splitting hairs here.

one is you have a choice in what to invest and is more risky, the other is insurer does it for u, pooled and invest in some low risk low returns instruments typically high grade investment bonds. to me, both still have investment component. sorry me simple minded therefore look at things more simply.

That is to explain why my guaranteed surrender values are not affected by stock market downtrend.

It is the lowest level of definition, for the layman.

Not here to convince or sell anything to u.

 

[yongsaver]

again. probably is my investment style. me don't like intermediary to do investment for me. me prefer DIY. that's why me don't like to invest in unit trusts, those online platform investment plans etc. me don't understand why need to pay people to do investment for me. more so now me more free at home. After my clean house, wash toilet, cook, scold children duties , me have time on hand to analyse investments and make the decisions myself.

 

[maple96]

again. probably is my investment style. me don't like intermediary to do investment for me. me prefer DIY. that's why me don't like to invest in unit trusts, those online platform investment plans etc. me don't understand why need to pay people to do investment for me. more so now me more free at home. After my clean house, wash toilet, cook, scold children duties , me have time on hand to analyse investments and make the decisions myself.

Good for u as a savvy investor.

I am not paying anything to the insurer to give that sort of returns from my WL, not even a single cent of premium. If one can survive to the life stage I am in now.

I dun mind paying a small fee, like investing in UT if I can make profits.

I will outsource whenever I can, as my priority had always been work hard, increase my salary, retire early. I "outsource" indirectly to the insurer

(but I will never pay a fee to those "robo investors", unless u tell me your porfolio was protected during the recent stock market crash.)

 

[pcmdan]

Incorrect. Let me define some of different types of life insurance policies, that I know, for purpose of comparison, a simplified definition (idea stolen from a book):

1. Wholelife (tranditional) = protection + surrender values (participating funds)
2. Wholelife (limited pay) = wholelife with less premium payment years
3. Wholelife (multiplier) = wholelife + term
4. Term = protection
5. ILP = term + investment (your own funds/premium)

Can u see the difference between Wholelife (traditional) and ILP?

Wholelife gets surrender values because the premiums are put into the pool of funds owned by the insurer. The insurer needs to make sure their income and sources of funds (ie premiums received) are invested to provide returns to the company plus cushion any claims from the insured. With wholelife, the insurer promised to share some of their returns from the company's investment (ie par funds) with the customers who buy wholelife = surrender values.

Amend a little

3. Wholelife (multiplier + limited pay) = wholelife + term + surrender value

Currently in market, many insurance companies selling this.

 

[Kaypohji]

Eh. I calculate one WL policy. As long as you surrender, the IRR is negative regardless what age. Only when death with 4.75% returns, then the WL policy has +ve IRR.

That is also worth buying ?

 

[maple96]

U put monies into CPF, govt take it to invest and give u a share of the profits.

Hearsay, they maybe make more than 6% but give u 2.5 to 4+1+!%.

Quite similar to WL (par funds), except more is guaranteed with CPF?

U are mandated to buy insurance with CPF Life, u lose more "premiums" if u choose standard/escalating when u die earlier than expected. U lose less with Basic CPF Life Plan.

With standard/escalating, u contribute more premiums, more for gov to invest so they can give u the payout until u die. The longer u live, the longer they will continue to pay u from the profits they make. But die early, your "premiums" paid are gone! It is very similar to Term Insurance, "premiums" down the drain but only when u die earlier than expected.

With Basic CPF Life Plan, money in RA also get invested, but u dun lose the 4%+1%+1% ("premiums") regardless of when u die. It is very similar to Wholelife + multiplier

With WL, u dun lose if u die anytime. I make profits if I survive till retirement, cashout the surrender values, enjoy life!

(this is CPF thread, so relate back to CPF vs Insurance)

 

[maple96]

Eh. I calculate one WL policy. As long as you surrender, the IRR is negative regardless what age. Only when death with 4.75% returns, then the WL policy has +ve IRR.

That is also worth buying ?

U not so fortunate as me, I can cashout anytime now, with 4-5% compounded returns. But I am not cashing out yet.