Asked by Anonymous
I never advise to surrender unless the policy is really bad coverage, bad wording, bad IRR and low yield to maturity.
I advocate really understanding the whole life insurance. Surrendering is not a word to be taken lightly. Although, I might want to take over your policy if that is the case (I mean if yield is good, who wouldn't right).
I would rather top up the difference (or gap) of coverage with term to BTIR.
I believe u got ur answer. Let me touch on the strategy buy term and invest. Many people know this theory but few actually executed it well. Buy term is really very easy - just Buy. But few managed to invest well. Some bought term but never really invest or invest badly since most of the time, investing is not really their core competencies.
So if u wanna adopt term and invest. Ask urself these questions. Do u hv the discipline to invest consistently? Can you invest well? Better than the professionals? Do you have the investment acument, emotional stability to stay invested throughout ur life, especially in a crisis?
Do ur math and get to know ur habits.
Mum got a cheap ‘Foundation’ plan from NTUC many years back. Premium is only $8+ per month. By age 55 i can get >$10000 back. Worth it to stay with the plan. So just check the investment and projected returns.
Personal opinion would be to keep at least one whole life insurance policy because the premiums are fixed at a very low rate. You might want to check if the life plan premiums have been fully paid for or not because these plans are usually limited pay.
Switching to term means having high coverage at a low premium but the downside is that the policy term is limited. After age 65 when the term ends for eg, that’s also the time when we are more susceptible to illnesses. Perhaps you can use the money gained from investment to fund for unexpected expenses but we can almost never guarantee our investment gains. So it really depends if you want to take that risk!
Hope this helps :)