2.Term
Plan--pros and cons
Term plan is cheap.But not a trendy and very hard to tell
your
clients that they cant get any return or profits from insurance
!!
MAS and stake holders (insurance co,Insurance professional
bodies etc)
shall review their effort to educate public in insurance,in the
past few decades.
Public just mix up insurance,savings and
investment.
One of the drawback of term plan
is it may not be renewable
if your health change.Or the Plan allow u to renew but with high
rating.
In life plan,touch wood,if u are sick after u get approval,
u are still covered and without paying extra premium,ie no
higher rating.
Another is the term plan may not
be convertiable to life plan.
Even u at ,say aged 60,
can afford to buy and want to
leave somethings for your grandson to study ,
u will feel sad if they dunt renew your term plan.
there is no such problem in life plan.
3.Coverage of
3 to 5 years of your income is too low
If we follow Mr Tan advices,the coverage for a man in the street
will be like this.
Let say Z earn a SG median income(just estimated),
say S$3500 per month.5 years gross income is $210,000
ok,say 250,000.Tell me ,my frens,is it enough for a widow
or widower?
SPOUSE DO NOT WANT TO TALK ABOUT INSURANCE.
BUT WIDOW/ER WANT COMPENSATION,THE MORE
IS BETTER.
I use the replacement of insured's income concept to
calculate
the coverage required.With a estimated yield or return AND
the insured's
net income,we calculate the insurance coverage required.
ie Net annual income divided by
estimated return from
insurance compensation = coverage
required
Net annual income
Assume Z spends 20% of his gross income,
including cash and all CPF,in income
tax,transport,entertainments,
clothing etc.His total balance of cash and CPF will be
$2800.
ie $33,600 per year.ie net annual income.
Estimated return from insurance
compensation
This is the fund to generate income to replace Z's net
income
for the family to survive IN LONG TERM.
So the savings or investments must be almost risk
free or very low risk.
This is very hard to guess.Fixed deposit just 0.5 to 1.5 %.
Share and funds,woooo.I dunt know.
So,i just pick one from the air say 5% to illustrate.
Coverage required
$33,600 / 0.05=$672,000
I know u will say wa!!!
How to achieve the required
coverage
buy a life plan plus maxium term riders,say 5
years term riders.
and mortage insurance(is a must)
In SG,term riders in the range of 2 to 5 times of life plan.
ask FA the best options.FA is one of your important fren in
your
life.The future of your family is on their hands.Buy them
lunch
or give them gifts.Trust me,The return is very high.
U must buy a mortage insurance .It is damn
cheap,
compared with life plans and even term plan.
MRTA---mortgage reducing term plan.
Even u dunt eat lunch few days in a month,u MUST
take up MRTA.This will save your family from a lot of
pains
when u cant produce income,either not around
or disable.Use hamburger to exchange for home!!
few sets of this in a month can exchange for
WHY SHOULD I LEAVE SO MUCH TO MY
WIFE
A poor widow cannot choose his job or the man she will
sleep with.
But a widow with reasonable insurance pay out
can choose NOT TO WORK to stay at home
to take care the kids 24/7 or choose her job.
The best is she can choose no need
sleep with another
man or a man she dunt
like.
So guys,it is YOUR CHOICE NOW affecting the CHOICE of your
wife
IN THE FUTURE when u not around,touch wood.
u may say i dunt have kid.No need to think so long.
Unless u dunt sleep with your wife from today,
who knows when u will has kid?
In insurace,one day late or one week late is too late.
FULL STOP.
.
