Young man need advice

[superEDED]

Hi guys, just wanna get an opinion from the people here. cause I just got into a heated argument with my parents and am very lost now.

I'm currently signed up with the following policies;

monthly income 2k before cpf.

AXA inspire flexiprotector, AXA Term Protector, AXA Early stage criticare and AIA solitaire Personal Accident. Current total premium ~$200.

All of which I have been paying for 16months. After a recent meeting with my agent, I was advised to terminate the policies from AXA and put my money into AVIVA MyProtector Term Plan and AXA Pulsar, which will raise my monthly premium to around $300 but as I am not able to put in so much money every month for the AXA Pulsar, I would have lowered my current monthly premium by 50%($100+) but have no more existing investment.

My parents feel that it is a waste of my money to terminate the inspire flexiprotector as I have already put in quite a fair bit of money for a long term investment.

I have already asked my advisor to hold plans of terminating the policies I was told to terminate(Never think about the invested money part, too focused on the reduced monthly premium....) as I realise what my parents said is quite true and that after terminating the flexiprotector i got no more savings; but on the other hand i was told I cannot sign the AVIVA policy because of my monthy income.

What should I do?

 

[unhinged_loon]

Hi guys, just wanna get an opinion from the people here. cause I just got into a heated argument with my parents and am very lost now.

I'm currently signed up with the following policies;

monthly income 2k before cpf.

AXA inspire flexiprotector, AXA Term Protector, AXA Early stage criticare and AIA solitaire Personal Accident. Current total premium ~$200.

All of which I have been paying for 16months. After a recent meeting with my agent, I was advised to terminate the policies from AXA and put my money into AVIVA MyProtector Term Plan and AXA Pulsar, which will raise my monthly premium to around $300 but as I am not able to put in so much money every month for the AXA Pulsar, I would have lowered my current monthly premium by 50%($100+) but have no more existing investment.

My parents feel that it is a waste of my money to terminate the inspire flexiprotector as I have already put in quite a fair bit of money for a long term investment.

I have already asked my advisor to hold plans of terminating the policies I was told to terminate(Never think about the invested money part, too focused on the reduced monthly premium....) as I realise what my parents said is quite true and that after terminating the flexiprotector i got no more savings; but on the other hand i was told I cannot sign the AVIVA policy because of my monthy income.

What should I do?

ILP.

...

I...



NEVER EVER MIX INSURANCE WITH INVESTMENTS.

ILPs are almost never a good idea.


No, seriously, NO.






There also something called the sunken cost fallacy. Go read up on it.

 

[unhinged_loon]

The basics of personal insurance coverage:

1. Hospitalization - even if it is just plain old Medishield without riders.

2. Term insurance - it is not strictly necessary if you do not have any dependents. However, if you do have dependents, the rule of thumb is coverage of 10 years worth of your dependent's expenses or 10 years of your salary. However, this may vary depending on personal needs and circumstances (which can and do change). Do you have dependents now? In the future?

3. Other riders/ additional policies such as accident, CI, early CI, etc may not be necessary, especially when your salary is low. Yours doesn't sound very high. Generally, it is not a good idea for a large chunk of your salary into insurance premiums.


Steer clear of ILPs and endowments. The former can be wealth destroyers because many unit trusts have a tendency of not to be profitable for their investors (unlike their managers). The latter just give poor returns for their tenures compared to other instruments.

Whole policies have their proponents and detractors, but they are not necessarily a great idea for savvy people.


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

As for investments, that's another whole topic altogether. Sort out your insurance policies first and we can discuss about investing for your future.

 

[savinmax]

After a recent meeting with my agent, I was advised to terminate the policies from AXA and put my money into AVIVA MyProtector Term Plan and AXA Pulsar, which will raise my monthly premium to around $300 but as I am not able to put in so much money every month for the AXA Pulsar, I would have lowered my current monthly premium by 50%($100+) but have no more existing investment.

The agent is only after one thing - his cut from your switch.
If it is the same agent, BLOCK him on your phone.

It's probably like a case of jumping from the frying pan into the fire.
Two wrongs don't make one right...

 

[unhinged_loon]

The agent is only after one thing - his cut from your switch.
If it is the same agent, BLOCK him on your phone.

It's probably like a case of jumping from the frying pan into the fire.
Two wrongs don't make one right...

Indeed. The commission for the agent is usually the highest in the first year and then tapers off. So after a few years, a switch and renewed commissions.

That said, ILPs either way are still bad.


In any case, any agent who flogs ILPs to unknowing customers ought to be dumped on sight...

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

As mentioned, most of the money paid in the first few years goes into the agent's commission, so the money is gone whether you kill off the policy or not.

Seriously, there are better ways to save and invest without buying policies from sales people (and that includes bank personnel!)

 

[Bigoya]

Hi guys, just wanna get an opinion from the people here. cause I just got into a heated argument with my parents and am very lost now.

I'm currently signed up with the following policies;

monthly income 2k before cpf.

AXA inspire flexiprotector, AXA Term Protector, AXA Early stage criticare and AIA solitaire Personal Accident. Current total premium ~$200.

All of which I have been paying for 16months. After a recent meeting with my agent, I was advised to terminate the policies from AXA and put my money into AVIVA MyProtector Term Plan and AXA Pulsar, which will raise my monthly premium to around $300 but as I am not able to put in so much money every month for the AXA Pulsar, I would have lowered my current monthly premium by 50%($100+) but have no more existing investment.

My parents feel that it is a waste of my money to terminate the inspire flexiprotector as I have already put in quite a fair bit of money for a long term investment.

I have already asked my advisor to hold plans of terminating the policies I was told to terminate(Never think about the invested money part, too focused on the reduced monthly premium....) as I realise what my parents said is quite true and that after terminating the flexiprotector i got no more savings; but on the other hand i was told I cannot sign the AVIVA policy because of my monthy income.

What should I do?

Did you sign up for AXA inspire flexiprotector, AXA Term Protector, AXA Early stage criticare and AIA solitaire Personal Accident with the same IFA agent who told you to terminate your all your policies from AXA barely after 16 mths and switch to AVIVA MyProtector Term Plan and AXA Pulsar?? He is just simply doing churning which is illegal.

He is clearly screwing you the worst way I've ever encountered. How did you even got to know him by the way?

inspire flexiprotector is an ILP.
Screw ILPs 'cos they offer pathetically low coverage that comes at high cost which usually results in low investment returns. Sounds like the best of both worlds but infact the worst of both worlds.
If he is from IFA, he could have sold you more cost-effective investment platforms with significantly lower fees instead. But that means he'd get leser commissions therefore he ended up selling you something lousy instead.

AXA Term Protector can switch to Aviva MyProtector if you are still healthy, they are both low cost Term policies that offers high coverage, but Aviva has higher and longer coverages at much lower premiums. You just have to make sure he doesn't sell you more than that you need (or consider planning your finances with someone else altogether).

He could have sold you AXA Life Exential Prime than AXA Early Stage Criticare. Both plans offer Early CI protection, but Life Exential Prime cost lesser for same amount covered and offers longer coverage.
Having that said, Early CI coverage is more of a want rather than a need, your income is too low to even consider paying for ECI protection.

There are so much more that I could comment on those individual plans he's sold and tried to sell you, but you should know that you are just randomly buying financial plans instead of doing a proper financial planning for yourself. It is clear that he has not even put in the minimal effort to try to plan your finances properly.

If you are only paying $200/mth for so many plans initially, I'd believe the sum assured for each coverage are quite pathetic. This portfolio only seems to look good, but it's useless should anything really happens to you.



My suggestion is you make sure you have a proper Shield Plan to cover your hospital needs and a Term plan to cover at least a good amount of say, $500k on death/TPD and $250k on CI. Insurance is after all an expenses, whether eventually you get to claim it or not. Never spend more than what is reasonable. Got extra cash from ur income, grow the money instead (and not via ILPs like Inspire Flexiprotector or Pulsar).

Get a proper adviser and also do your own due diligence.

 

[qhong61]

Hi guys, just wanna get an opinion from the people here. cause I just got into a heated argument with my parents and am very lost now.

I'm currently signed up with the following policies;

monthly income 2k before cpf.

AXA inspire flexiprotector, AXA Term Protector, AXA Early stage criticare and AIA solitaire Personal Accident. Current total premium ~$200.

All of which I have been paying for 16months. After a recent meeting with my agent, I was advised to terminate the policies from AXA and put my money into AVIVA MyProtector Term Plan and AXA Pulsar, which will raise my monthly premium to around $300 but as I am not able to put in so much money every month for the AXA Pulsar, I would have lowered my current monthly premium by 50%($100+) but have no more existing investment.

My parents feel that it is a waste of my money to terminate the inspire flexiprotector as I have already put in quite a fair bit of money for a long term investment.

I have already asked my advisor to hold plans of terminating the policies I was told to terminate(Never think about the invested money part, too focused on the reduced monthly premium....) as I realise what my parents said is quite true and that after terminating the flexiprotector i got no more savings; but on the other hand i was told I cannot sign the AVIVA policy because of my monthy income.

What should I do?

Don't terminate.

 

[Bigoya]

Don't terminate.

Please state your rational if you want to be helpful.

 

[qhong61]

Please state your rational if you want to be helpful.

Same thinking as his parents.

 

[akwl88]

Take home pay 1.6k

Total.premiums 200

12.5% spent on useless insurance policies

Good job to your agent, not you.

Follow the advice by unhinged loon and limit ur premiums to not more than 5% of ur take home pay too

In this case, ard 80 per month

 

[wealth_farmer]

Do you qualify for the Aviva SAF group term life policy? If so, that should be your first policy as it's pretty competitively priced.

For the savings and investment bit, just do it yourself. POSB Invest-Saver is a good starting point worth considering.

 

[01asdf]

Any agent that recommends terminating one policy to buy another is someone to be avoided.

Also, is it just me or does he not have a hospitalization plan in that whole smorgasbord?

Congratulations on having all the useless or semi-useless luxuries while missing the most basic essentials.

 

[BBCWatcher]

Do you qualify for the Aviva SAF group term life policy? If so, that should be your first policy as it's pretty competitively priced.

Only for someone with dependents. Life insurance is to protect the lifestyles of survivors in the event of the death of the policyholder.

 

[anfielder]

Kill the ILP immediately. You will get nothing back, but that's better than continuing to pour money down that black hole. Chances are that even after 10 years you will still be making losses, so it's not really a long term savings plan but a blood-sucking demon in disguise.

Treat it as education fees for your financial journey.

 

[wealth_farmer]

This is very true. TS please familiarise yourself with the concept of sunk costs. In life we will make mistakes with our money and embark on the wrong financial enterprises. The solution is not to grit your teeth and press on but to learn to recognise these as sunk costs and don't throw good money after bad.

Unethical agents will say, "But if you stop now, all your previous premiums will go to waste. Such a pity!" This is a fallacious argument and a red flag. Take the hit now and put your future dollars to better use.

Kill the ILP immediately. You will get nothing back, but that's better than continuing to pour money down that black hole. Chances are that even after 10 years you will still be making losses, so it's not really a long term savings plan but a blood-sucking demon in disguise.

Treat it as education fees for your financial journey.

 

[wealth_farmer]

I get your logic. But I assumed his parents are dependents. In Asian society, we like to leave our parents something in case we children go first. TS probably doesn't have the near-term capacity to generate a significant portfolio for his parents use if he goes first, so term life still represents the best opportunity to cover the high-impact, low probability event that he does leave this world. If he's gonna get something to insure his life, and I'm sure he probably will, then may as well take the lowest cost product that does the same thing.

/edit: Someone upthread pointed out that TS doesn't seem to have hospitalisation and surgical insurance yet. Yeah TS needs to sort that out first and foremost.

Only for someone with dependents. Life insurance is to protect the lifestyles of survivors in the event of the death of the policyholder.

 

[unhinged_loon]

Same thinking as his parents.

The money has already gone into the pockets of the agent and the company. He won't see a cent back either way.

 

[unhinged_loon]

I get your logic. But I assumed his parents are dependents. In Asian society, we like to leave our parents something in case we children go first. TS probably doesn't have the near-term capacity to generate a significant portfolio for his parents use if he goes first, so term life still represents the best opportunity to cover the high-impact, low probability event that he does leave this world. If he's gonna get something to insure his life, and I'm sure he probably will, then may as well take the lowest cost product that does the same thing.

/edit: Someone upthread pointed out that TS doesn't seem to have hospitalisation and surgical insurance yet. Yeah TS needs to sort that out first and foremost.

We don't know his family circumstances. He may have siblings and we don't know the health condition and age of his parents.

We don't know his health conditions and risk profile, but he sounds young. I'd consider him as reasonably low risk of kneeling over in the next 10 years. If he wants term protection, he can get some, but he should be putting more into better long term investments. Those long term investments can either serve as his future retirement fund, or touch wood, something to leave behind in the event of something unfortunate.

Still, as I said last night, ensure that he has hospitalization coverage. Hospitalization costs are likely to be the bigger nightmare if something does happen to him.

 

[satayxp]

Take home pay 1.6k

Total.premiums 200

12.5% spent on useless insurance policies

Good job to your agent, not you.

Follow the advice by unhinged loon and limit ur premiums to not more than 5% of ur take home pay too

In this case, ard 80 per month

even 5% is too high
shld be 2% considering 2k salary is like bottom income quantile

 

[akwl88]

even 5% is too high
shld be 2% considering 2k salary is like bottom income quantile

yup reducing to 2%, think the coverage also has to be reduced too