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Anonymous
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.
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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
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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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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.