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

Joke: statements on motor accidents

> I collided with a stationary truck coming the other way.

> The guy was all over the road. I had to swerve a number of times before I hit him.

> I pulled away from the side of the road, glanced at my mother-in-law and headed over the embankment.

Flexi-link and Ideal plans

Hi Mr. Tan,

From the website, I realised NTUC income have Flexi-link policy & Ideal policy. May I know what are the main difference between the two? If I did not understand wrongly, Flexi-Link(Invest in 1 lump sum min. $5000) Ideal (Invest regularly - min. $100/mth)

There are different plans policy under Flexi-Link (IB1/2/3/4) and Ideal (ID1/2/5/6/7). However the differences are not explained clearly in the website. I only managed to found out a table which shows the policy fee and adviser charges of each policy.

Are you familiar with the above policies? Can you explained more to me about the differences of these policies to clear my doubt. Thks.

REPLY
If you have $5,000 to start the initial investment, it is better to invest in the Flexi-Link. You can have regular monthly top-ups. The front-end charge for Flexi-Link is 3.5% for each investment. The annual charge is deducted from the fund and varies from 1% to 1.5% depending on the fund invested.

The Ideal plan is a regular saving plan for people who are not able to make the initial investment of $5,000. The Ideal plan are subject to the same charges as the Flexi-link plan and, in addition, there is a further charge of 15% on the annual premium for 3 years (total of 45%) for ID2 and a different charge for ID7 (only available through the business center).

I suggest that you go to the business center in Bras Basah Road and ask the consultant to explain it the difference to you in detail.

The best choice is Flexi-link (if you have $5,000 to invest) or ID7 (but only available through the business center).

Joke: statements of motor accidents

> Coming home I drove into the wrong house and collided with a tree I don't have.

> The other car collided with mine without giving warning of its intentions.

> I thought my window was down, but I found it was up when I put my head through it.