Savings plan (insurance)

[Lewis.T]

Hello, insurance agent.

Hello, was anything I said there wrong that you disagree with?

Contribute to the discussion, don't be a PCW. If you disagree with me, do a counter argument. If you want to add on to what I said, feel free to do so.

What's the point of coming in and saying hi insurance agent when it's already stated in my signature?

 

[Lewis.T]

It's not so simple.

The premium does look cheaper when you start a term or whole life plan when you are younger, but it's may actually more expensive when you take into account Time Value of Money.

For example a 10 year PruLife Ltd Pay for a 30 year old is ~$3075/year and for a 25 year old is ~$2666/year. If we assume a 3% interest rate, this is equivalent of a $23420 single premium for a 25 year old. If a 25 year old decides to wait 5 years before starting the PruLife Ltd Pay for 10 years at the higher rate, it is actually equivalent of a single premium of $23300 paid now.

But if the person were to choose to get it at 25 or 30, that 'extra' $120 or so equates to 5 years of extra coverage. You're not factoring that in your delay 5 years calculation. There is a cost to insurance!

Apart from that, there's also cash values involved which means the cash value of the earlier purchase will be ~5 years in advance of the one the person buys at age 30.

That being said, if you DIY the difference the one at 30 years will come out ~2k on top at a 4% ROI over the period of 15 years (age 25 to 40). I find this a negligible amount compared to the coverage and the 'advance' of cash value you receive. The cash value of 5 years could very well be more than 2k by itself but I'm not going to delve that deep into the calculations unless someone is really arguing for the point of delaying getting a limited term life plan.

 

[Lewis.T]

There are glaring flaws in your arguments. Both illustrations are assuming 10 years coverage and an exact same time frame (which really is what present value literally means). If anything, the 30 year old should be more expensive than the 25 years old due to higher mortality.

The better argument should be contesting on the assumed rate of return of 3%. Insurance products are always actuarially priced - meaning they are fairly and statistically risk measured to be in equity. This is more so when they are from the same company and product line. They are both worth the same.

Lewis either doesn't understand tangent or he doesn't understand time value.

Sent from Ilovennp using GAGT

Or you do not understand a limited premium life plan.

To make it clear, coverage for such plans are for life, no matter the age you start. If you do a 10 year premium plan for a 1 year old baby the 1 year old baby gets coverage for life. If you do a 10 year premium plan for a 30 year old the 30 year old gets coverage for life. (From age 30 of course)

So for the purpose of the example, a person starts at age 25 and pays premiums till age 35.
In the second scenario, the person delays for 5 years and starts at age 30 and pays premiums till age 40.

Between the ages of 25-30, the person who starts at 30 can grow the difference at say 4% interest. (-2666 payment, 4% interest, beginning, 5 years annual = $15017.51 FV)

However for the next 10 years he can't invest anything extra because he has $3075 premiums to pay versus $2666. (PV is -15017.51, interest 4%, beginning, 10 years, FV = $22229.58)

For ages 30-35, the person who started early gets to invest the difference of $3075 - $2666 = $409 per year for 5 years. (Payment -409, interest 4%, beginning, 5 years, FV = $2303.89)

Ages 35-40, the person who started early gets to invest the difference of $3075 per year for 5 years. (PV -2303.89, Payment -3075, interest 4%, beginning, 5 years, FV = $20124.43)

If you assume interest earned on all external investment is 4%, I've calculated the difference at age 40 to be ~2k in favour of the person who started at age 30.

Thus I said 2k (at age 40) is negligible compared to the loss of 5 years of coverage plus the cash value that is attained when starting 5 years earlier.

Please go through my calculations and tell me I'm wrong somewhere, which I might be because I haven't fully woken up yet lol.

 

[Wishdom]

Or you do not understand a limited premium life plan.

To make it clear, coverage for such plans are for life, no matter the age you start. If you do a 10 year premium plan for a 1 year old baby the 1 year old baby gets coverage for life. If you do a 10 year premium plan for a 30 year old the 30 year old gets coverage for life. (From age 30 of course)

My apologies, is it not a term life plan? I must have misread.

Sent from Ilovennp using GAGT

 

[Lewis.T]

My apologies, is it not a term life plan? I must have misread.

Sent from Ilovennp using GAGT

No issues, I've edited my post above with some calculations. We were discussing a limited premium life plan. Also known as a limited premium term life plan (amongst other names like limited pay life plan).

The premium term is limited, not the duration of coverage which is limited. Confusing I know.

 

[justwakeup]

Or you do not understand a limited premium life plan.

To make it clear, coverage for such plans are for life, no matter the age you start. If you do a 10 year premium plan for a 1 year old baby the 1 year old baby gets coverage for life. If you do a 10 year premium plan for a 30 year old the 30 year old gets coverage for life. (From age 30 of course)

So for the purpose of the example, a person starts at age 25 and pays premiums till age 35.
In the second scenario, the person delays for 5 years and starts at age 30 and pays premiums till age 40.

Between the ages of 25-30, the person who starts at 30 can grow the difference at say 4% interest. (-2666 payment, 4% interest, beginning, 5 years annual = $15017.51 FV)

However for the next 10 years he can't invest anything extra because he has $3075 premiums to pay versus $2666. (PV is -15017.51, interest 4%, beginning, 10 years, FV = $22229.58)

For ages 30-35, the person who started early gets to invest the difference of $3075 - $2666 = $409 per year for 5 years. (Payment -409, interest 4%, beginning, 5 years, FV = $2303.89)

Ages 35-40, the person who started early gets to invest the difference of $3075 per year for 5 years. (PV -2303.89, Payment -3075, interest 4%, beginning, 5 years, FV = $20124.43)

If you assume interest earned on all external investment is 4%, I've calculated the difference at age 40 to be ~2k in favour of the person who started at age 30.

Thus I said 2k (at age 40) is negligible compared to the loss of 5 years of coverage plus the cash value that is attained when starting 5 years earlier.

Please go through my calculations and tell me I'm wrong somewhere, which I might be because I haven't fully woken up yet lol.

What is the insured amount in your example?

 

[BBCWatcher]

I'm gonna agree to disagree with BBC's point on medical coverage. People do get injured during NS. While we are covered for during NS, we might be subjected to exclusions or premium loading when we purchase new hospitalisation plans after NS. I think it's worth shelfing 2 years of premiums for future's sake.

He didn’t disagree on hospital plans, only life plans.

I think that was a contest on medical coverage.

KinoChoco is correct, but I'll elaborate....

The relative importance of getting an Integrated Shield plan doesn't really change at age 18 with National Service. That's not a key milestone as such. Pre-existing condition considerations apply right from the beginning. (In Singapore you have to be at least 15 days old to enroll in an Integrated Shield plan. If you're going to enroll -- if your parent/guardian is going to enroll you -- then that's a great time to do it. Not to wait until age 18.)

If you're like about two thirds of Singaporeans, you'll already have Integrated Shield coverage of some kind, as a child/infant, started well before NS. If you don't have an Integrated Shield plan, OK, let's discuss that, but let's ask first, OK? That's why I advised we not leap into recommendations without first understanding genuine needs and existing coverages. Quite often, in this forum, we hear, "Oh yeah, my mom/dad enrolled me in XYZ's Integrated Shield plan Q" -- very, very common.

 

[mummynew]

Don’t be so narrow minded and think everyone is the same, there are lucky ones who managed to get off without exclusion or front load.

If you only got one policy without exclusions / loading even after declaration, then there is a chance that the underwriter was sleeping when doing your case (if more than one case, then unlikely unless you are super lucky for a double or triple coincidence).

My niece is a Hep B carrier. Her covers, incl IP, all come with liver exclusion. Then, she has a CI policy that was accepted as standard life. My adviser said very lucky coz the underwriter must be sleeping and so make sure to keep the policy properly.


*My son ever suffered a hairline crack on his ankle due to sports. Then when buying CI, the insurer wanted to exclude something. I appealed with a doc's full recovery cert (that I didn't get from the orthopedic after he covered) and later was accepted as standard life.

Sometimes need a bit of 'luck' as in to see who is underwriting the case. Not all underwriters / insurers are the same.

 

[KinoChoco]

If you only got one policy without exclusions / loading even after declaration, then there is a chance that the underwriter was sleeping when doing your case (if more than one case, then unlikely unless you are super lucky for a double or triple coincidence).

My niece is a Hep B carrier. Her covers, incl IP, all come with liver exclusion. Then, she has a CI policy that was accepted as standard life. My adviser said very lucky coz the underwriter must be sleeping and so make sure to keep the policy properly.


*My son ever suffered a hairline crack on his ankle due to sports. Then when buying CI, the insurer wanted to exclude something. I appealed with a doc's full recovery cert (that I didn't get from the orthopedic after he covered) and later was accepted as standard life.

Sometimes need a bit of 'luck' as in to see who is underwriting the case. Not all underwriters / insurers are the same.

I was really lucky I guess?

My first policy (income shield + rider) was about 8 years back. I had my first spine surgery 10 years back. Everything was declared and no exclusion. Now let’s fast forward...I had my 2nd surgery and 3rd surgery at 5 & 4 years back....subsequently bought 2 AXA life plan 2-3 years ago, no exclusion and front load too. Everything was declared.

 

[mummynew]

I was really lucky I guess?

My first policy (income shield + rider) was about 8 years back. I had my first spine surgery 10 years back. Everything was declared and no exclusion. Now let’s fast forward...I had my 2nd surgery and 3rd surgery at 5 & 4 years back....subsequently bought 2 AXA life plan 2-3 years ago, no exclusion and front load too. Everything was declared.

You are super lucky.

One case I know of a young grad lady declared 'mild eczema' for IP application, also kena exclusions (under NTUC).

 

[TiedInsurer]

Hey guys, I found out about this hack for PolicyPal referral y’all can thank me later when it works because I just tested it and I'm still waiting for the $50.
Create your referral link and then share it with your mother/father
And then buy the ELASTIQ plan (1.8%p.a. guaranteed) using their info, put in 5k for the plan.
Because it's shared by you, you get $50 CASH for buying, then mother/father get $10 credit (this one don’t count first save for next time)
They ALSO got promo for $10 cash for 5k premium. (wah siao, how they earn money haha)
You calculate $50 (referral) + $10 (promo) + $90 (interest) = $150
$150/$5,000= 3% guaranteed! Where to find?
Then after 1 year, you can withdraw, if after 3 months also can withdraw if you need. If you want the policy in your name just create a link for mother/father and share with yourself. If y’all wanna use the hack better hurry up before the tranche close or PolicyPal find out about it hahaha.
If you wanna buy and lazy to create link, you get $10 credit if you use my link: redacted

Reported etc etc.

 

[item2sell]

zhun bo? got such thing?

later cannot get back the 5k. how