facebookMy insurance agent just approached me to get a life term insurance. Should I go for package that include investment or just the Term Product? Any advice? - Seedly

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ZT

Zachary Teo

Art Director at Ad Agency

22 May 2020

Insurance

My insurance agent just approached me to get a life term insurance. Should I go for package that include investment or just the Term Product? Any advice?

I know how to invest but just wondering how do you guys go about with this. Do you diversify your investment with insurance company?

Discussion (9)

What are your thoughts?

Hi as many have mentioned, I WOULD NOT mix insurance and investment.

For me, I'll go with Whole/Term Life and do the investing separately.

If you are new to investing yourself, you can always go for ETF or Unit Trusts. Lesser cost and management fees if you do it yourself. If you have a larger risk appetite, you can go for stock picking (start with blue chip) after learning the basics of investing

Do your basic budgeting and needs here first: https://www.aaronleow.com/insurance-requirement...

Afterwhich, a general guideline is that your complete insurance portfolio to protect your income should be capped at 10% of your after CPF income, that would be the rule of thumb.

To answer your question specifically, the assurance charges for ILPs are good for new-borns, but the cost will go up significantly as they age. As such, whether a recommendation can be considered depends on your life stage.

The structure of an ILP tied to insurance is to ensure that the wealth portion covers the increasing cost of the insurance as you age. There are benefits of ILPs that are not present in traditional term and whole life policies. The main risk is that the investment risk portion is on you, not the insurer. However, the flexibility which ILPs give are very good factors when making a recommendation.

Looking at several whole life and ILPs over the years, I can say that properly structured ILPs held over 20 years from the infancy of a child will bear more fruits than a traditional whole life policy. The numbers simply do not compare. The numbers are in fact, an overwhelming crushing defeat.

ILPs have a very bad rep, however, with experience on looking at the numbers across many cases, I strongly do not believe that they should be dismissed entirely from existence.

ILPs tied to insurance are meant as protection driven products, the investment portion is secondary.

If your objective is sole investments, get investment-driven products.​​​

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Hey there! A term plan is definitely an option for you, in terms of affordability etc. The cash flow...

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