Life insurance - keep or redeem?

[CaptainWu]

I have 3 Life Insurance plans brought decades ago, they are accident and life plan valid till I am 100 years old so no way its going to expire soon as I am now 50+ only. There are Cash and Bonus values and I am now thinking whether to still keep them or to redeem them. My only dependence is my wife but my CPF/Assets should be okay for her to live if I am passing away so these life insurance plans should only be a added value but not essential.

Two of the plans the Cash/Bonus value are higher than what I paid, the other one still under water, I have no idea when this can be turned positive as really struggle to understand the calculation.....They are pretty low profits though as they are just life insurance plan not investment. As I still have to pay them yearly and so I started wonder if I still need them or just redeem and redeploy the funds for other things. I am thinking of cutting unnecessary expenses as going into retirement age.

Any guru's advices will be appreciated. There is no need to ask me why I brought them when young as its been decades and probably not relevent to whatever decision I am going to make.

 

[sohguanh]

My only dependence is my wife but my CPF/Assets should be okay for her to live if I am passing away so these life insurance plans should only be a added value but not essential.

Above is key. I think no need give her so much monies (you already give her CPF/assets) when you die. You got 3 can say terminate 2 left 1? How about your parents if still around or outlive you maybe can nominate them as beneficiaries?

 

[CaptainWu]

Above is key. I think no need give her so much monies (you already give her CPF/assets) when you die. You got 3 can say terminate 2 left 1? How about your parents if still around or outlive you maybe can nominate them as beneficiaries?

Parents both passed away. I’m also thinking of keep the one under water (the highest amount life plan) but this one I’m paying 1800 a year with around 100k whole life plan. So thinking if it still worth to keep.

 

[sohguanh]

Parents both passed away. I’m also thinking of keep the one under water (the highest amount life plan) but this one I’m paying 1800 a year with around 100k whole life plan. So thinking if it still worth to keep.

For your case no parents no kids only left wife it should be easier for you to manage. If you predict you can live a very long life, then obviously need to keep at least 1 or 2. The other can terminate to get cash once the surrender value is above your total premiums paid so far. That is for me if I am in your situation.

Story become complicated if your spouse is not working for many years then depend how much you want to give her in case you pass away even if you think your CPF/assets is enough. For me, so old already I want to pamper myself more. Who know after I pass away, my spouse look or kena cheated by another man with my monies super rugi.

 

[Geeezz]

can see the bi?

 

[CaptainWu]

can see the bi?

What is bi?

 

[qhong61]

I have 3 Life Insurance plans brought decades ago, they are accident and life plan valid till I am 100 years old so no way its going to expire soon as I am now 50+ only. There are Cash and Bonus values and I am now thinking whether to still keep them or to redeem them. My only dependence is my wife but my CPF/Assets should be okay for her to live if I am passing away so these life insurance plans should only be a added value but not essential.

Two of the plans the Cash/Bonus value are higher than what I paid, the other one still under water, I have no idea when this can be turned positive as really struggle to understand the calculation.....They are pretty low profits though as they are just life insurance plan not investment. As I still have to pay them yearly and so I started wonder if I still need them or just redeem and redeploy the funds for other things. I am thinking of cutting unnecessary expenses as going into retirement age.

Any guru's advices will be appreciated. There is no need to ask me why I brought them when young as its been decades and probably not relevent to whatever decision I am going to make.

Unless u need the money.

 

[sohguanh]

What is bi?

Also known as Benefit Illustration. Most insurance policy has this table which will show at which year you pay how much premium already up to that year and if you surrender you get back how much etc. From this table you can find your "break-even" year which is total premiums paid == total surrender (guaranteed portion) + non-guaranteed portion

 

[CaptainWu]

Also known as Benefit Illustration. Most insurance policy has this table which will show at which year you pay how much premium already up to that year and if you surrender you get back how much etc. From this table you can find your "break-even" year which is total premiums paid == total surrender (guaranteed portion) + non-guaranteed portion

Okay, yes I have it and this also show I already break-even with the Surrendar value for the first two policies and I am started to have non-guarantee accumulated bonus but the rate is pretty low. With the Market situation I am thinking to put the Cash into Stock since this is not counted as part of the original portfolio so can take higher risk.

The remaining higher value one it is far from break-even until I am 90+, that's the one I am struggle as if I redeem now I may loss around 11k but it is far too long to wait for the break-even or I already gone

 

[sohguanh]

Okay, yes I have it and this also show I already break-even with the Surrendar value for the first two policies and I am started to have non-guarantee accumulated bonus but the rate is pretty low. With the Market situation I am thinking to put the Cash into Stock since this is not counted as part of the original portfolio so can take higher risk.

The remaining higher value one it is far from break-even until I am 90+, that's the one I am struggle as if I redeem now I may loss around 11k but it is far too long to wait for the break-even or I already gone

Depending on the insurance policy. I have TokioMarine (last time known as Asialife) where they called it limited premium whole life. Basically they tell me I only need to pay X years premium after which the policy will be in-force until the maturity. This is good becuz as one grow older one may retire no income how to continue paying the yearly premium?

If your policy is the old fashioned one then you need to re-think again. Once you retire no income you still want to pay the the yearly premium? For me I will terminate 1 or 2 since only dependent is only spouse and no more. Take out monies pamper ownself.

 

[Chewbaca]

Instead of terminating or continuing to pay, another option is to convert the whole life policy to a paid-up policy.

It works something this :
1. The cash value built up after all these years is converted to the sum assured.
2. You stop paying premium.
3.The advantage is if anything happens, you dependent can get the pay-out (new sum assured plus the bonus declared so far).

 

[sohguanh]

Instead of terminating or continuing to pay, another option is to convert the whole life policy to a paid-up policy.

It works something this :
1. The cash value built up after all these years is converted to the sum assured.
2. You stop paying premium.
3.The advantage is if anything happens, you dependent can get the pay-out (new sum assured plus the bonus declared so far).

Is this something similar I read before use the cash value to pay the premium? What if the cash value run out after X years will the policy lapse due to non-payment of premium subsequently?

 

[CaptainWu]

Depending on the insurance policy. I have TokioMarine (last time known as Asialife) where they called it limited premium whole life. Basically they tell me I only need to pay X years premium after which the policy will be in-force until the maturity. This is good becuz as one grow older one may retire no income how to continue paying the yearly premium?

If your policy is the old fashioned one then you need to re-think again. Once you retire no income you still want to pay the the yearly premium? For me I will terminate 1 or 2 since only dependent is only spouse and no more. Take out monies pamper ownself.

I recalled when the policy proposed there is such an option but when I asked the agent few years back and she told me no. I thought as a minimum I can use the Cash Value to pay for the perimum at least for a decent years. My agent already changed so there is no such policy term so not able to chase further.

 

[CaptainWu]

Instead of terminating or continuing to pay, another option is to convert the whole life policy to a paid-up policy.

It works something this :
1. The cash value built up after all these years is converted to the sum assured.
2. You stop paying premium.
3.The advantage is if anything happens, you dependent can get the pay-out (new sum assured plus the bonus declared so far).

Sounds interesting. Let me explore this with the agent as not sure if this is something available.

 

[Chewbaca]

For converting to a paid-up policy i see it as the policy is "frozen" with the converted "new" sum assured (usually the cash value) and you do not pay any more premium. The advantage is you do not service the policy anymore and yet you still have coverage. For those who have the policy for a long time, the cash value is usually substantial (more than breakeven).

This is not the same as using the cash value to service the policy . Using the cash value to service the policy is actually taking a policy loan, which draws down on the cash value built up.

 

[CaptainWu]

For converting to a paid-up policy i see it as the policy is "frozen" with the converted "new" sum assured (usually the cash value) and you do not pay any more premium. The advantage is you do not service the policy anymore and yet you still have coverage. For those who have the policy for a long time, the cash value is usually substantial (more than breakeven).

This is not the same as using the cash value to service the policy . Using the cash value to service the policy is actually taking a policy loan, which draws down on the cash value built up.

Isn't it like using the Current Value to set a Life Insurance sum so as to convert this as paid-up policy? The Insurance sum is expected to be lower but still with some coverage better than nothing?

 

[andyhtc]

For mine, beyond around 60 years the illustrated projected yield drops. Perhaps the insurance companies feel that I will be a greater liability and charges a higher premium.

I will only cut mine off when I'm fully retired and without an active income. I will put the cash into very safe fixed deposits or government bonds.

 

[sohguanh]

For mine, beyond around 60 years the illustrated projected yield drops. Perhaps the insurance companies feel that I will be a greater liability and charges a higher premium.

This is logical isn't it? If you are the boss of the insurance company what option would you choose for very old customer who has a high risk to make claims? You are operating a for profits company.

 

[Milo-Dino]

Okay, yes I have it and this also show I already break-even with the Surrendar value for the first two policies and I am started to have non-guarantee accumulated bonus but the rate is pretty low. With the Market situation I am thinking to put the Cash into Stock since this is not counted as part of the original portfolio so can take higher risk.

The remaining higher value one it is far from break-even until I am 90+, that's the one I am struggle as if I redeem now I may loss around 11k but it is far too long to wait for the break-even or I already gone

Hmm interesting... I would have thought most whole life plans would "breakeven" by year 19-20

Speaking based on my own policy

 

[sohguanh]

Hmm interesting... I would have thought most whole life plans would "breakeven" by year 19-20

Speaking based on my own policy

Long time ago I think like you do until I saw my spouse Msia bought insurance. Their BI is you never break even all the way. The plus side is based on premium paid the payout is very high indeed something similar to term insurance we have here in Spore. Such kind of policy any year you terminate you lose monies. So to earn back is to make a claim.