I am totally divided now. :) David Bach is preaching most of us to take up Level Term Plan but yet my trusted financial coach has asked me to take up a Limited Premium Whole Life insurance.
Well below is the difference between the 2 Plan.
Level Term Plan (35 years)
- Have Death / TPD / Critical Illnesses coverage
- Same premium for 35years, which means I am paying S$76,440 in total
- With $182 per month, I am covered S$430,000 for 35years, which means there is NO coverage after 35 years, but Income is offer a guaranteed renewable after that 35 years until I am age of 80 (i am still finding out the premium for that renewable)
- No Cash Value after 35 years
Limited Premium Whole Life (Pay for 25 years and Protected for life)
- Have Death / TPD / Critical Illnesses coverage
- I pay S$187.65 for only 25 years to be covered for life, which means I am paying S$56,110 in total
- High Premium for only S$100K to a maximum of S$175K (age of 65) coverage
- If projected 5.25% returns, the policy would have about S$100,477.00 cash value in 36 years time (age: 65)
As everybody can see, if I am going for Protection, Level Term Plan is the one to go for, as my dependents (although strictly speaking I don't any dependents now) gets more if anything were to happen to me. Because if taking inflation of 3% of 25years, I need at least S$209,377.79 to cover myself, which is NOT achievable in Limited Premium Plan.
But if I am going for Cash Value or FREE Protection after I retire, I will be going for Limited Premium Whole Life. However, if I am going for Cash Value, why not take some of the premium to go investment, which gives more % back... which leaves the only attractive advantage of free protection after I retire at the age of 40 :) Oh god, I am so confuse
I need your help, what is your opinion on this issue? Please feel free to comments.
Disclaimer
The above information is wholy author's personal opinion. It does not intend to replace any professional advice. If legal advice or other professional advice, including financial, is required, the services of a competent professional person should be sought.
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1 comment:
Hi Fellow Singapore Automated Millionaires,
Thanks to my friend Ron from Finexis, he told me that there is Level term plan until a person is 99 years old.
Hence, I asked him for a Level Term Plan from AXA until I am 80years old (no dependables already). For a S$280,000 coverage for Death/CI/TPD, the premium is only S$130 per month. And if I take the difference of S$50 (from what I am paying now) to invest in a Balanced Fund of ROI 8%p.a. until I am 65, this will give me a "Cash Value" of S$121,242.19.
This is better than my original Cash Value of my Whole Life. Yes, of course, I pay more in long run, about S$23,265 more. But my S$50 investment will compound even more :)
I have post this to my Financial Coach and hopes that she can get back to me regarding about this ASAP.
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