Insurance protection
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Dear All,
I find an arcticle that is worth sharing with you guys. It was published in the Magazine Invest Jun/Jul2008.
Top 10 Common Mistakes in Protection Planning
Making a mistake in buying an insurance product can result in huge financial consequences.
In ocean navigation, lighthouses and buoys serve as important reference points and indicate hazardous spots to avoid. Similarly, this second article on Proper Protection Planning will attempt to serve as a lighthouse or buoy in the navigation to financial well–being by having a discussion
on the main class of insurance polices available in Singapore and the common mistakes and misconceptions to avoid.
Due to the complexity of the different class of products, consumers often use the incorrect type of policy to meet their needs or purchased them with the wrong concept. Making such mistakes can result in huge
financial consequences.
The following is a brief discussion. Consumers have a common misconception that premiums paid for insurance policies
are “wasted” if there is no claim. As such, with–profits or participating plans As discuss ed above, with–profits or are very attractive as the premiums can be “recovered” with profits. Under the 4W of financial planning, namely; Wealth Protection, Wealth Accumulation, Wealth
Preservation and Wealth Distribution, Protection is the primary consideration.
In the case of Whole Life Plans (WL), it is incorrect to view the policy as a form of savings/investment vehicle and to surrender the plan at retirement for the cash value. Probability of claim increases with
age. Surrendering the plan at retirement age would mean letting go of the plan when you need it most. WL should be viewed as a form of Wealth Protection. The returns generated should be viewed as a way of keeping pace with inflation. For Term plans, the premium paid is for pure protection without any returns and thus, cheaper than WL or Endowment plans.
participating plans are very attractive to consumers. Thus, endowment plans are favored when getting an insurance policy. Endowment plans are essentially saving plans (Wealth Accumulation) with some protection. They are not meant to provide a good protection as the coverage is low
compared to a WL or Term plan.
A lot of consumers still do not see the need to start preparation for coverage in retirement years early. The thought of reaping a return after a fixed number of years is very appealing to them. So, instead of getting a WL or Term plan, many go for an endowment plan. Similar to using endowment plans for life protection, using PA plans as the primary protection is also rather common.
PA plans can provide a big coverage at very low premiums. However, such plans’ coverage is only valid when it is due to accidents only. That is why the premiums can be so low at such a high coverage. Consumers might get
the impression that they are well covered when in fact they are not.
Mistake No. 1
Thinking that premiums are “wasted” if there is no claim
Please read on from here.
http://www.ifa-sg.com/wp-content/uploads/2008/07/2008_06_01_top_10_common_mistakes_in_protection_planning.pdf -
Charmaine_chong:
In my younger days, i've bought like 2 or 3 life-policies, so for that area, i'm fine. i have little medical and hospital coverage i think, of course there are riders in the life-policies, but i think i should look into a term life policy as well...Hi All,
In order to get good advise from licenced financial advisor, i find that usually fee based financial advisor does better job. Commission based financial adviser sells to meet target, sell products with high commission components, that is how they earn, instead of focus on clients needs. This is what i encountered so far.
I have ever called up a firm who provide fee based advise, they charge $100 per hour.
It takes about 2-4 hours to seek advise for insurance protection. nothing else.
If you need advise for financial planning for a family, it easily cost 3k plus.
Tree nymph,
Term plan is usually cover for TPD+CI+TI+Death for up to 30 years. I knew UOB life (now taken over buy prudential) has term plan that covers till age 99 or 100 with money return. If i am not wrong, HSBC has such plan too.
You need to get a H&S as charged feature, this is a must for everyone. Aside of this, we can buy LONG TERM CARE to take care of us in the event that one can't even perform daily activities eg: changing clothes on her own...
On top of getting insurance to get protection, we need a good habit to save cash regularly and do some investment.
Thanks for the recommendaton, hquek and Charmaine. I will go look and see and try to sniff out one that suits my needs and my wallet. -
Yeah it's very important to have insurance.... Wish I could have applied for a million dollar insurance ;)...
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Hi all,
For sharing purposes.
I have found out that Life policy from Tokio Marine offers the best.
Eg: For a life protection of S$100k sum assured for 2yo. The child gets protection for S$250k in the event of death, TPD and Illness till age 65. Premium is about $100-110. I coudn’t recall.
Tokio Marine provides the best life policy thus far whereas for hospital and surgical plan, NTUC has the best plan. Policy holders need to pay 10% of the bill up to S$3k per policy year. Example if the bill is $3k, policy holders bears for $300 medical cost. For Aviva H&S that i am currrently insurred. The first 3k has to be borned by policy holder. They have just launched a rider to cover $3k but premium is pretty high.
For Children’s education, Tokio Marine offers the highest guarantee sum but heard that they no longer provide such plans.
This is my findings so far. -
Hi all, if you are looking for term plans and $1m coverage, u can private message me to share further too.
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Think ultimately is what you require vs what you can afford
Everyone would like to be well-covered for all events, have the highest payout and lowest monthly cost
Personally I try to mix and match accordingly to what I think I would need … started with a life policy whereby to pay for 25yrs (I think) … then covered for life till death
then some investment/insurance policies as income increases over the years …
although most company would provide some form of hospitalisation and medical coverage, would advise to get some persoanlly as well so that when we do retire … at least we have some form of coverage … else would be very difficult if we start having medical issues along the way
my 2 cents -
Yap that’s right. is based on everyone’s needs and then planning is done.
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Anyone can advice the best insurance coverage for critical illness in town now?
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baobei:
Anyone can advice the best insurance coverage for critical illness in town now?
The current hot trend for critical illness coverage is those plans that provide early-stage critical illness claims & those that allow multiple claims
Happy hunting
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