A reader was given a Benefit Illustration for a life insurance policy (PayMyUni). He did not understand the product and asked for my advice.
The Benefit Illustration contained many pages of information. It is quite complicated to read through the details. Most of the information are not relevant to the consumer who has to make the decision.
The consumer should ask a few questions to the financial adviser:
1. What is the amount that I can get back at the end of the term, based on a projected yield of 3.75% and 5.25% p.a. ?
2. What is the amount that I can get by investing the same premium over the same period to earn 4% p.a. ?
If you buy Term insurance (and spend 5% of the premium) and invest the remaining 95% in a low cost investment fund, you should be able to earn a net yield of at least 4% p.a.
The insurance agent will tell you a lot of other information, that are usually irrelevant to your decision. You should not be distracted by the sales talk. You should focus on getting the relevant figures for your decision.
My advice is to avoid all life insurance products sold by insurance agents, as they have high expenses. To save for a child's education, you can follow the tips here:
http://www.tankinlian.com/faq/education.html
Saturday, August 16, 2008
Pro-Trader getting to be popular
105 players have now registered to try this application that provides a simulted trading environment:
http://tankinlian.com/trader/
35 players logged in yesterday to play the game. Many of them played a multi-player game to compete against other players.
http://tankinlian.com/trader/
35 players logged in yesterday to play the game. Many of them played a multi-player game to compete against other players.
Save for a child's education
Dear Mr. Tan
I've read your blog and aware of benefit of term insurance (cheaper compare to whole life policy). I intend to buy one term and one education policy for my child. As you were formerly with NTUC Income, you should be able to tell me more about the plan call 'PayMyUni' whether it provide good returns or not.
REPLY
I am not familiar with PayMyUni as it was introduced after I left Income. Usually, I advise people to save for a child education through a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/education.html
I've read your blog and aware of benefit of term insurance (cheaper compare to whole life policy). I intend to buy one term and one education policy for my child. As you were formerly with NTUC Income, you should be able to tell me more about the plan call 'PayMyUni' whether it provide good returns or not.
REPLY
I am not familiar with PayMyUni as it was introduced after I left Income. Usually, I advise people to save for a child education through a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/education.html
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