Anonymous
Does anyone know if it is common for financial advisors to recommend leverage to finance a policy?
My aunt and uncle are both retired with a comfortable amount of money. They already have some endowment plans that are capital guaranteed. However, their financial advisor suggested a 250K policy financed with a 150K loan from the bank, while they fork out the remaining 100K.
I can't help but feel like this is unwise. Does anyone have any opinion on this?
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You'll probably need to provide more context into the policy and defination of comfortable amount of money.
What's their defination of retired with a comfortable amount of money?
This is my personal defination of financial independence:
-Sufficient insurance coverage
-Property to live in
-Passive incomeexpenses
Are they retired and living off passive income where their passive income their expenses?
If they're living off their savings, would it be enough to last them till they die / at least 25 years? Accounting for inflation as well.
The leveraged policy the financial advisor reccomended may be a retirement policy that accounted for their desired retirement passive income to meet their needs.
If they've little to no debts, leveraging can be a means to achieve more earning power when used appropriately.
However, without more context, it's hard to give further comments to your post.
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Chris
16 May 2021
Owner and Writer at Tortoisemoney.com
Actually, it's not that uncommon. My dad actually has one (NTUC Solitaire I believe) which has been ...
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I'm in the same situation. What did your aunty and uncle do with the bank loan? Does it make sense to redeem the loan since the interest rate is so high now?