Insurance Woes

Who sold you those plans in the first place? should get your finanical advisor to review those given your current circumstances.

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not sure how long you have been servicing these plans, if you have serviced for a while, you can look at possibiity to sell those endowment plan to third party.

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If really no choice, and

If i were to choose, i will let go of first,

1) the endowment plans, Plan 5 and 6. You can invest in SSB or bonds probably will have close performance in terms of return. most importantly, for SSB, you have the liquidity.

2) the next would be Plan 8. with so many investment product, you can look at Robo for example, which is less demanding in terms of financial commitment in my view.

3) if not enough still, cancel Plan 3 and see if you can boost plan 4 at lower cost. Assuming your age not too far from 25 years old.

4) unless you really need the fund.. and if and only if your company has similar hospitalization plan, you can temporarily cancel plan 1 and 2. you can take it up again when financially you are comfortable.

Hi anon,

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I'm so sorry to hear of your situation. With a house and wedding coming up, it can be very tight (I walked your path before). So it's frustrating to see your paycheque drain out month after month.

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I will start by saying that I'm guessing that your savings in FDs are not meant for the purposes of paying off future insurance premiums....

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Let's see what we can do, here are my thoughts.

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Plans 1 and 2. This is your integrated shield plan. Keep it. The only question is whether you're okay to have private hospital coverage in the long run. Premiums escalate drastically and it can be costly, however the premium difference between private and public hospital is not a lot at your age.

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Plan 3. Whole life CI. $25K base sum assured is about the lowest you can go already for life plans. You've had this plan for about 3 years, but I generally do not recommend dropping this. It will protect you pretty much for the rest of your life, for early CI.

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Plan 4. This is a very old policy and probably one of the best plans I've seen all these years that I've been working with my clients. It's whole of life CI coverage. Keep it. The compounding effect of the bonus has reached a point where I hvae a feeling the bonuses credited are more than your yearly premium, so the payout is really $108K + accumulated reversionary bonus + terminal bonus (only known at point of payout). Just confirm that the sum assured is $108K however. Living policy does NOT cover early CI, you might want to make a small amendment to your summary sheet. Please thank your parents for getting for you when you were born. Don't we all wish we were protected from the moment we enter this world?

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Plan 5. Savings. The question will be whether you truly need this plan. $201.02/mth is not a small amount, it's 17.5% of your monthly expenditure. This plan is not for protection purposes. I generally do not recommend paying more than 10 years for a savings plan should you need one, as it gives lesser accumulation runway. Still, I can understand why you might have been 'convinced' to take it up as I note that you had multiple plans that were all pretty much bought at age 23. While an endowment has its uses, the fact that this money could be put to use elsewhere like your house or wedding is already a stress on you. Some options include withdrawing the cash coupon to fund the premiums if you really cannot afford it, reducing the sum assured (will have a nasty impact on the values as you are just 3 years into it) or selling it off to a resale endowment firm.

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Plan 6. Lifetime endowment with payouts. There should be an annual cash bonus on this one that already' started. You're about halfway through. As much as $150.60/mth could be helpful somewhere, I really think you should finish this one off. Then use the cash coupons to fund other expenses from 2030 onwards. Other alternatives are to reduce sum assured (which reduces the premiums) or sell it off to a resale endowment firm. If you were to choose one to keep between plan 5 and 6, I'd keep 6 precisely because you're at the halfway mark already. You've just started on plan 5.

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Plan 7. Personal Accident. $218.54/yr should be manageable? Of course, there may be better plans out there for the premiums you pay, but we're not looking at that for now.

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Plan 8. Investment Linked Plan. This is the one that's causing you the headache. This plan alone is 43% of your premiums. To top it all off, you've pretty much just started it. And this plan has whole of life premiums. You are allowed to reduce premium at year 5 (month 49) but there will be a penalty. You can go on premium holiday as well but there will be a penalty. And if its within the first 2 years (I'm guesssing it is as this plan was launched late 2021), any surrender would pretty much wipe out every cent you put in. There's simply no easy way out. An ILP does force you to stick to a premium payment term and is definitely not as flexible as normal investing which is why I do not recommend it to people I work with. I'm really sorry to have to deliver this news, but you are pretty much stuck with this for some time (short of surrendering). While I will not say that you must surrender it, you have to decide for yourself if this is truly what you want in the long run.

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Sidenote: On investment based ILPs, I share my thoughts here. Have a read.

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Plan 9. Multipay CI cover. Well, that's nice to have, except that you pay this all the way till you claim (and hopefully your advisor added a premium waiver for you) or you pass on. Which could mean that you keep paying if you stay healthy till you are no longer around. While multipay is a great coverage to have in my view, paying till age 99 is almost certainly not. Consider this point before you take any action on this plan. Are there better options? Probably. Not the most pressing issue as plan 8 is still the biggest drain on your cash flow.

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So what's my conclusion? Purely on protection (plans 1,2,3,4,7,9) you're paying about $328/mth. That's close to your target of $300/mth and that $28/mth over 'budget' should not be worrying you at all (at most, find a better option for your multipay and you'll be at $300/mth). So it really is plans 5,6,8 that's pretty much what you need to 'deal' with, especially plan 8, which you just started on and has the heftiest commitment. Followed by plan 5 and lastly plan 6 (if truly needed).

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I'm really so sorry to see that you've been lead to this point over the years, but don't give up hope. There's likely a way out.

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All the best and if you have more questions, just reply to my comment and I'll take a look when I can.

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P.S. As a side note, I'll just tell you one more thing that I noticed and that you might want to think about (which has nothing to do with reducing premiums). You're about to get married and have a mortgage. Get yourself covered for death and TPD on a term plan and add a premium waiver. Plenty of options and they are not expensive at all. You can even top up some CI cover with the term if you need to. Do it for yourself and your future spouse. As for the exact coverage amount and duration, you should have a word with an advsior you trust.

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Oh and pardon any spelling errors, I'm typing this at 2am before I head to bed :)