facebookIs it wise to take up term life (death + TPD + CI with $1mil coverage) with additional early CI plan (total monthly premiums about $100+) to replace a whole life $300k coverage with monthly premium $301? - Seedly

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Anonymous

18 Apr 2019

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SeedlyAMA

Is it wise to take up term life (death + TPD + CI with $1mil coverage) with additional early CI plan (total monthly premiums about $100+) to replace a whole life $300k coverage with monthly premium $301?

I'm looking at protection only and not necessary for investment at the current stage. Thanks!

AMA SG Young Investment

Discussion (5)

What are your thoughts?

Luke Ho

Luke Ho

11 Sep 2018

Level 10Β·Kick-Ass Financial Services Consultant at Trillion Financial Planners

Hi,

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Like Tat Tian said, there's very little information to work with but I'm going to try my best to extract every single part of what I'm gleaning.

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Is it wise - Wisdom in this scenario would be defined as meeting your needs more specifically without compromising your current situation. Here's a few factors you want to consider:

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a) Annual Cost or Monthly Cost - If it's lower, it's obviously a point in the favor of a new policy.

b) Total Costs - Most Whole Life plans are limited pay. As a result, unless you invest the difference (and you've stated that you're not looking at investments at the moment, which is a red flag), the likelihood of you spending more overall especially when accounting for Term CI and ECI is much higher overall.

c) Surrender Charges - How old is your WL plan? I'm guessing its not that old, because most people don't get an old plan WL coverage of $300k. I'm foreseeing some hefty surrender charges.

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For the record, I've encouraged clients to replace their previous WL policy before. This is a practice that can be frowned upon unless you justify to MAS and the insurance company why you recommended it with the clients approval to avoid churning. But WL policies, and the cost of insurance for death was much higher in the 1990s than it is today - and it made financial sense - so I'm not talking out of a place of senseless bias.

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The best way is to really allow someone to look at your policy currently versus your replacement and write down a detailed proposal and recommendation as to whether this is the best cause of action moving forward. There are other factors involved aside from the basic 3 I mentioned, which I'd love to talk to you about and help you with if you givie me a chance. As an FA, I can also help you get competitive prices for the same coverage while managing the future investment portion as well.

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By the way, I downvoted Yuan Chan's statement because telling someone to replace their policy is not something to be suggested vaguely and lightly. It's highly irresponsible. I'm not.

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You can always contact me at https://www.facebook.com/luke.ho.54 if you'd like me to help you further, at no cost to you.

For more about me, here's my site: https://www.moneymaverickofficial.com/

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Best of luck.

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Loh Tat Tian

Loh Tat Tian

11 Sep 2018

Level 11Β·Founder at PolicyWoke (We Buy Insurance Policies)

Without sufficient information, I am unable to tailor a good reply to the information that you seek. I would need to assume the following:

1) Your premiums for WL leave you with no spare cash for any other insurance.

2) There is a massive gap in the insurance coverage you require for your dependents, hence you are looking at 1M term insurance, which likely end at 65.

3) ECI coverage must be minimum if premiums are low, at about 100k.

Based in the information, you can do the following:
1) Buy the term insurance early, since there is a waiting period.
2) Enquire about how to reduce sum assured to become a paid up policy for the whole life, then action on it
3) invest any remaining cash.

Peace out

Eric Chia

Eric Chia

13 Sep 2018

Level 7Β·Senior Financial Consultant at Prudential

There are at least two things to consider based on the information you gave above!

1) The size of p...

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