Is it wise to get the $1 mil death coverage for your parents? So when they pass away, you will become a millionaire instantly.? - Seedly
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Anonymous

Asked 2w ago

Is it wise to get the $1 mil death coverage for your parents? So when they pass away, you will become a millionaire instantly.?

Don't mean to sound unfilial, but this is probably the best shortcut to become a millionaire in Singapore!

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Lester Tay
Lester Tay
Level 3. Wonderkid
Answered 2w ago

Why is seedly promoting these garbage questions?

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Yeap Ming Feng
Yeap Ming Feng

2w ago

Hey! I am not sure what you mean by garbage question. There is no wrong or garbage question. Every question is valid, which is also the same reason we created this platform to give Singaporeans a safe platform to ask questions and engage in proper discussion. I understand that you may have your own point of view. This OP's question is actually not uncommon. In some of my daily conversations with my peers, there are people who actually ask about such stuff, and I don't see anything wrong with it.
Deedee

2w ago

Perhaps to add on, I do know of parents (age 50+) who got such cover for themselves till age 99/100 and proposed for their child(ren) to pay for their term coverage upon retirement if they are unable to fully pay for them. But I guess this only works if it fits into their overall budget well and some people see this as investment probably?
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saylavee
saylavee
Level 4. Prodigy
Answered 2w ago

Assuming both are at 60, premiums for term policy will be extremely high for them. I'm excluding life since there will be cash value included which will cost even more than term. To start, how will you know the age of their passing? Given most singaporeans live till 75-80 approx, you will need to be covered for at least 20years. Females tend to live longer so their premiums will be higher than males.

Using Singlife term plan,

20y plan non smoker 1.4k/mth for 2m payout (1m plan each), if they live beyond 80, thank you for paying.

40y plan non smoker 3.9k/mth for 2m (1m plan each). this is pointless.

To sum up, buying term is a gamble and you have to hope that they go within the term period. Of course there are better plans with different prices and tncs, just make sure you do your research.

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Y
YT
Level 2. Rookie
Updated 2w ago

Insurance is a risk management tool for us to protect our dependents. If our parents bought a $1 million policy on themselves with us in mind, it's their gift and legacy to us.

If you buy the same policy on their lives hoping to profit from their departures, you are nothing more than a loser waiting for an inheritance which you have done nothing to work hard for.​​​

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MA
Mr anonymous
Level 3. Wonderkid
Answered 2w ago

Isn't this just giving you an incentive for them to die ASAP? You have to insure them appropriately, not just from a ROI pov and pov of your benefits alone.

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Ember Sh-en
Ember Sh-en
Level 4. Prodigy
Answered 5d ago

My friend's father bought an insurance for himself. After 2 years, he committed suicide. So his kids will get an annuity for many years.

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A $1 million term plan has been pitched by some advisors and term plan believers as a way to plan your legacy.

While it may sound enticing, term plans should be kept to its purpose, to cover for a specific term. There are many things in life that are hard to predict, why complicate it further with things that were made for a different purpose?

Things that could go wrong with such planning:

  1. Your parents outlive you and cannot afford the premiums; policy lapses and you lose the money you "invested"

  2. You are not able to keep up with premium payments as you also enter retirement while your parents continue to live even older; policy lapses and you lose the money you "invested"

  3. Your parents live beyond the expiry of the term (one of the insurer actually has a policy that pays out the sum assured at 101 but the premiums costs more than a UL); you lose the money you "invested"

Remember that actuaries would have factored in the rate of policies being lapsed in their calculation of term policies. Do you want to be a part of their projected lapse cases?

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Mingli Lin
Mingli Lin
Level 4. Prodigy
Answered 2w ago

To get $1 mil the annual payment is pretty high isn't it? What happens if they don't conk out until 101? Jialat la...

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powieee
Level 2. Rookie
Answered 2w ago

It's wiser to take the money you pay for their insurance premium and invest in various investment avenues.

You get to enjoy your investment profits with the flexibility to cash out your investments time to time and go have a great time together with your parents creating memorable moments than to just wish they pass so that you get your million.

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