Dear Mr. Tan,
I have already committed to a investment linked policy with X. I have been paying $300 a month for the past year. My cash value is very low. I learn from your blog that this is due to the high commission earned by the insurance agent. If I swtich to the Wealth Accumulator, will I earn a better yield?
REPLY
The investment linked policy that you have bought could take away up to two years of your savings, or $7,000. If you terminate it earlier, you will reduce your loss. If you invest in a fund with no front-end load, there is no additional cost to you. You will benefit from the savings in the remaining charges under the ILP.
As the low cost investment fund has smaller expense ratio, your investments will earn a better return over the longer term. This is in additional to the saving in the front end load. You will get a double benefit.
In general, it is advisable for you to terminate your existing regular premium ILP and move to the Wealth Accumulator.
Saturday, April 19, 2008
Switch into the Wealth Accumulator account
Hi Mr. Tan,
I have a lot of money invested in NTUC's combined fund. Will it be better for me to switch my investment into the low cost investment fund that it becomes available, i.e. the Wealth Accumulator account?
REPLY
I expect a new life insurance company will introduce the Wealth Accumulator plan in 6 to 12 months time. As it will have no front-end charge, you can switch from any existing fund or unit trust, at no switching cost.
You will benefit from the lower expense ratio of the low cost investment fund. The difference could be 0.5% to 2% for each year of investment. You may be able to get 5% to 40% more, over 10 to 20 years, by switching.
I hope that you will also be able to enjoy better customer service from the new company, as it will have a new computer system and call center to serve the customers better.
You can wait for details to be announced, before you make this decision.
I have a lot of money invested in NTUC's combined fund. Will it be better for me to switch my investment into the low cost investment fund that it becomes available, i.e. the Wealth Accumulator account?
REPLY
I expect a new life insurance company will introduce the Wealth Accumulator plan in 6 to 12 months time. As it will have no front-end charge, you can switch from any existing fund or unit trust, at no switching cost.
You will benefit from the lower expense ratio of the low cost investment fund. The difference could be 0.5% to 2% for each year of investment. You may be able to get 5% to 40% more, over 10 to 20 years, by switching.
I hope that you will also be able to enjoy better customer service from the new company, as it will have a new computer system and call center to serve the customers better.
You can wait for details to be announced, before you make this decision.
New Life Insurance Company
Hi Mr. Tan,
I'm sure I'm not the first to tell you this. You give great advices on insurance buying and investments.I truly enjoy reading your blog and FAQs.
I'd like to have some suggestions for life insurance I'm planning to purchase. I'm 23 years old this year and just started working full-time with little or no savings.
I am thinking of getting the SAF Group Term policy with a Sum Assured of $200k with monthly premium of $25.60. Or shall I just get a decreasing term insurance and invest the rest like you always mention?
I can't seem to find good Decreasing Term insurance. Could you give me some advices on which particular insurance and ETF fund?
REPLY
If you wait a few months, there will be a new life insurance company that will offer Decreasing Term and low cost investment funds.
Meanwhile, you can keep your savings in the bank account. Although it earns 1%, at least the saving is intact and is not used to pay hefty commission to the insurance agent.
You can buy the SAF Group Insurance. It offers a high protection at a very low cost. You will probably find the premium to be even lower than the benchmark rates shown here:
http://www.tankinlian.com/faq/benchmark.html
I'm sure I'm not the first to tell you this. You give great advices on insurance buying and investments.I truly enjoy reading your blog and FAQs.
I'd like to have some suggestions for life insurance I'm planning to purchase. I'm 23 years old this year and just started working full-time with little or no savings.
I am thinking of getting the SAF Group Term policy with a Sum Assured of $200k with monthly premium of $25.60. Or shall I just get a decreasing term insurance and invest the rest like you always mention?
I can't seem to find good Decreasing Term insurance. Could you give me some advices on which particular insurance and ETF fund?
REPLY
If you wait a few months, there will be a new life insurance company that will offer Decreasing Term and low cost investment funds.
Meanwhile, you can keep your savings in the bank account. Although it earns 1%, at least the saving is intact and is not used to pay hefty commission to the insurance agent.
You can buy the SAF Group Insurance. It offers a high protection at a very low cost. You will probably find the premium to be even lower than the benchmark rates shown here:
http://www.tankinlian.com/faq/benchmark.html
Decreasing Term
Dear Mr. Tan,
I am a 27 years old. I have bought life insurance with insurred sum of $30,000 which cost $50 premium a month.
I realised the insurred amount is far from sufficient for me especially I have parents in their fifties who will be retire soon, with insufficient savings for their retirement.
After reading from your website, I realised that the decreasing term insurance is affordable for me to provide a monthly income of $3,000 to my parents till they're 80yrs old, should anything happen to me.
However, when I have tried contacting Aviva and Ntuc Income on decreasing term insurance for insured amount for $900,000. They told me they do not offer decreasing term insurance. Do you have any idea which insurance companies still offer this? I know they do offer this level term insurance?
REPLY
You have to buy a level Term for the time being. Perhaps you can insure for 5 to 10 years.
If you wait a few months, I expect a new life insurance company to offer the decreasing Term plan.
This FAQ shows you the cost of providing a monthly income of $3,000 under a Family Income benefit:
http://www.tankinlian.com/faq/benchmark.html
I am a 27 years old. I have bought life insurance with insurred sum of $30,000 which cost $50 premium a month.
I realised the insurred amount is far from sufficient for me especially I have parents in their fifties who will be retire soon, with insufficient savings for their retirement.
After reading from your website, I realised that the decreasing term insurance is affordable for me to provide a monthly income of $3,000 to my parents till they're 80yrs old, should anything happen to me.
However, when I have tried contacting Aviva and Ntuc Income on decreasing term insurance for insured amount for $900,000. They told me they do not offer decreasing term insurance. Do you have any idea which insurance companies still offer this? I know they do offer this level term insurance?
REPLY
You have to buy a level Term for the time being. Perhaps you can insure for 5 to 10 years.
If you wait a few months, I expect a new life insurance company to offer the decreasing Term plan.
This FAQ shows you the cost of providing a monthly income of $3,000 under a Family Income benefit:
http://www.tankinlian.com/faq/benchmark.html
Avoid structured products
Dear Mr Tan,
What's your opinion of the above investment ? More details here..
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/64371117c74b5e3548256b45002829a5/5D19C104BD374A3948257428003AA880/$File/Pricing%20Statement%20-%20Registration%20(with%20MM).pdf
REPLY
This is a structured product. I advice people to avoid all structured products.
Read this FAQ:
http://www.tankinlian.com/faq/sinvest.html
What's your opinion of the above investment ? More details here..
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/64371117c74b5e3548256b45002829a5/5D19C104BD374A3948257428003AA880/$File/Pricing%20Statement%20-%20Registration%20(with%20MM).pdf
REPLY
This is a structured product. I advice people to avoid all structured products.
Read this FAQ:
http://www.tankinlian.com/faq/sinvest.html
Time Honoured Values
Dr. Lee Kum Tatt has spent a great deal of time studying how values affected his life, his family’s and that of others. Read some of his views on the importance of values to our lives in his Blog www.leekumtatt.blogspot.com.
Some of these articles were written many years ago but they are still valid.
Some of these articles were written many years ago but they are still valid.
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