Managing Personal Risks

Insurance agents tell customers about the risk of death and gets them to save a lot of money in life insurance policies.

To manage your personal risks, you need to consider the following:

> you need to take care of the risk of "premature death", i.e. death that occurs during your working life (until your children are grown up)
> there is no need for life insurance beyond 65 (as everyone will die one day anyway)
> you need to have sufficient savings for your retirement
> your medical expenses can be covered by Medishield , so critical illness insurance is not necessary.

Too much savings is being spent on whole life and critical illness insurance today, due to advice by insurance agents. The chance of death or a critical illness occurring during the working life is less than 5% or 10%. But, it takes away too much savings and leave behind too little savings being invested for retirement (which is the risk faced by more than 90% of the population.

Many people today have inadequate savings for their retirement, due to bad management of their personal finances. They put too much money in life insurance policies that take away high expenses and give a poor yield on their savings.

To manage your personal finances better, read these FAQs:

http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html

Remember. The insurance agent will give you many other reasons to buy a whole life or critical illness insurance. They must market the product, as they are paid commission on the sales. You can ask the agent how much commission is paid to them. It is stated in the Benefit Illustration. The commission comes from your premium. It does not come from the generosity of the life insurance company.

Joke: statements of motor accidents

> As I approached an intersection a sign suddenly appeared in a place where no stop sign had ever appeared before. I was unable to stop in time to avoid the accident.

> To avoid hitting the bumper of the car in front I struck a pedestrian.

> My car was legally parked as it backed into another vehicle.

New era of shortages

Will the world enter into a new era of shortages? Oil? Food? What will be the impact?

http://newpaper.asia1.com.sg/columnists/story/0,4136,169560,00.html

http://www.tankinlian.com/drmoney/

Financial planning for a young family

Hi Mr. Tan

My husband and I are doing our reviews of our profile. My financial planner recently recommends that we increase our critical illness coverage to at least $125K, via a limited pay term insurance. The two products recommended are Asia Life TM Legacy and NTUC Income Vivolife.

I have read your FAQ and I'm not sure if we should be increasing the critical illness coverage by another $100K. We have two young children, that's also the reason why we want to ensure at least we are sufficiently covered.

REPLY

Both of these products are high cost products that give poor value to the consumer. I advice people to buy a 20 year Level Term insurance, and to invest the difference in a low cost fund.

You can see some examples of the difference in the FAQs in my blog:

www.tankinlian.com/faq
http://www.tankinlian.com/faq/true.html
http://www.tankinlian.com/faq/age65.html

Joke: statements of motor accidents

> In an attempt to kill a fly, I drove into a telephone pole.

> I had been shopping for plants all day and was on my way home. As I reached an intersection a hedge sprang up, obscuring my vision and I did not see the other car.

> I had been driving for forty years when I fell asleep at the wheel and had an accident.

Claim ratios on motor insurance

Are you paying the right premium for your motor insurance? Dr. Money analyses some claim ratios of insurance companies in Singapore:

http://newpaper.asia1.com.sg/columnists/story/0,4136,170194,00.html

http://www.tankinlian.com/drmoney/

Charges of Investment-linked plans

Hi Mr. Tan,

May I know is it that all regular ILP does not invest 100% of our preimum from the 1st mth? Does single premium ILP invest 100% of our preimum?

REPLY

There must be 100 different ILPs in the market. I am not able to tell you the difference in structures between these plans. You should ask the insurance companies.

Read this FAQ:
http://www.tankinlian.com/faq/ilp.html