Should I cancel my insurance plan? I am reaching 55 next year, i am considering whether to cancel my WL insurance which i have brought in year 1985 and put it into CPF to earn 4% interest. Is it a good idea? - Seedly
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Retirement

Insurance

Whole Life Insurance

CPF

Anonymous

Asked on 08 Aug 2020

Should I cancel my insurance plan? I am reaching 55 next year, i am considering whether to cancel my WL insurance which i have brought in year 1985 and put it into CPF to earn 4% interest. Is it a good idea?

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Tan Yu Ji
Tan Yu Ji, Economics at Nanyang Technological University
Level 6. Master
Answered on 11 Aug 2020

As someone who has been in the insurance industry, I would say that Whole life insurance are not meant to be an investment product. The cash value inside a whole life plan (3% on average) is inferior compared to investing (at least 3%). Hence, I would definitely recommend you to buy a term and invest the rest.

However, do note that you are already at the age of 55 and buying a term plan now might not be worth it since the premiums are higher at older age. Additionally, if your Whole life plan has already been fully paid and building up cash value, you can keep it till you are at retirement age to use that amount of money. That is, if you have no one to leave a legacy behind for.

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Frankie Rappaport
Frankie Rappaport

11 Aug 2020

Thank you kindly for your honest perspective. I imagine that a lot of clients are not informed on the inferior investment issues with whole life. Also the 3% are based on historic facts and as are pendion plans prone to yield cutting when necessary? thank You!🍀
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You have to do your opportunity cost analysis.

You can write to us with your policy and we may wish to takeover your whole life plan.

https://www.policywoke.com/sell-to-us

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Aug)

Level 9. God of Wisdom
Answered on 08 Aug 2020

Whole life are inferior investment products

.

some views, here

.

https://www.investopedia.com/articles/active-trading/120814/life-insurance-smart-investment.asp#the-bottom-line

"The Bottom Line

Using permanent life insurance as an investment might make sense for certain high net-worth individuals looking to minimize estate taxes. But for the average person, buying term and investing the difference is usually the better option."

https://www.thesimpledollar.com/insurance/life/whole-life-insurance-as-an-investment/

" Of course, when something sounds too good to be true, it usually is, and this is no exception. Life insurance is typically not a good investment and in most cases you’ll be better off avoiding it. "

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CH
CH
Level 7. Grand Master
Answered on 08 Aug 2020

Not sure about the policy plan details and objective,

but if it was me and the plan broke even, and i do not need the plan for estate planning. then, yes, i will find another better yielding instrument.

(i assume since 1985 until now should have at least break even, if not already have some gains, but please do check)

but take note that there is limit to how much you can put cash into CPF each year.

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Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
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