facebookDo you guys think I am spending too much on my insurance/savings/investment plans? - Seedly

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Anonymous

11 Nov 2020

Insurance

Do you guys think I am spending too much on my insurance/savings/investment plans?

My take home salary after deducting CPF is about $2070. My current policies are:

Prushield Premier Extra: $49.91
PruPersonal Accident: $22.95
PruMan: $26.63
PruActive Life: $108.53
AIA Pro Lifetime Protector Plus: $166
PruWealth II: $259.30
AIA Smartrewards Saver (II) 25: $53
AIA Pro Achiever: $209

All policies are being paid monthly. Hope to hear what you guys think.

Discussion (11)

What are your thoughts?

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Yes. A quick calculation says your monthly total premiums is 800+, which is 39% of your take home pay. Its the same as saying 5 months of your take-home pay is used to service insurance premiums each year. Quite extreme.

I don't know what is your extent of coverage but frankly I will be quite worried for you. Because if anything happens, then how are you going to "feed these policies"?

If 40% of your take home pay is already spent on insurance, do you have enough to set aside for your own emergency funds, or to pay the household bills?

I would think that this would be the amount that a person in your income bracket group would spend on housing / mortgage and not insurance lor.

Not too healthy - I think you need to approach an independent advisor to reassess your coverage and policies.

Personally I feel hospitalizations policy is the most important (since that addresses the cost of medical bills), and also my personal opinion that insurance premiums should be no more 10-15% of take home pay - otherwise how to buy House, or save or invest?

** suggestions to help fix your situation
1) most medical / hospitalizations policy can be paid (to large extent) from medisave. You might need to consider this to free up some cashflow. Got cash savings, can then do medisave top-up to get tax relief from it

2) I think you need to ask financial advisor why you need a separate personal accident policy instead of considering like rider. Frankly I don't buy personal accident, but that's me.

3) I think quite a few folks asked why you have multiple ilp + endowment. I think you need to seriously ask why Ilp when you have a life policy, what purpose is your endowment for. Serious concerns here.

4) once you decided which ones to keep, and which ones not to keep, consider if making annual / quarterly premiums will help you reduce total payments per year. I think it can shave between 5 to 8% off premiums for making an upfront payment for full year.

My personal opinion - if you keep all the policies, and end up using 5 months of salary to service premiums each year, you will really restrict your life going forward, for getting married / buying hdb, I think you will need to push it out quite a few years, because it will be quite difficult for you to save.

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From what I see, you have multiple ILPs that make up the majority of the cost. While it is good that you have started thinking about investments, I personally feel that having more than 1 ILP/endowment is overkill due to the fees involved.

You may want to look into cutting your losses with them and put that money into robo or diy investments instead. I would suggest cutting those that have the same coverage as your current insurance policies to make sure that there are no gaps in coverage

Jiayee

09 Nov 2020

Salaryman at some company

I am not familiar with the policies (in terms of the name) above. Consider keeping only these, if yo...

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