Bought another insurance policy

Recently I bought another insurance policy - it's called a gym membership. I've been walking/running for nearly a year already, doing it quite consistently for 5 days a week, so I'm quite sure signing up for a gym membership will be a good insurance policy to guard against future health issues.


I signed up with the ActiveSG membership first, and following the instructions, I got a credit of $100. This was an initiative set up in 2014 to encourage Singaporeans to live a healthier lifestyle. I know I'm a bit late in claiming the credits, but better late than never. For off peak gym membership, the free credits will allow me to use the gym for more than a year for free. Anyway, it's not that important since it's one of the cheapest rates in town at $40 per 6 months. Hard to beat at this price range.

Even as my body is aching from all the physical exertions, I think this should be a great start in 2020 to boost up my health sphere even further. I'm not getting any younger, and I need to take responsibility to make sure I stay healthy for my kid. While an actual insurance policy is reactive in nature (it helps only after some health issues had happened), doing more exercise will certainly help in being preemptive (preventing or delaying some health issues from happening). Can't control what might happen in the future, but the least I can do is to build a good base when I am still able to.


Seems like I have a lot of things on my hands. Need to exercise, need to read, need to practice on piano, need to work, need to have family time, haha

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What's with the rant against whole life plans?

I bought a whole life plan. In fact, 2 of them. One is a traditional whole life, where you pay until forever. The other is a limited payment whole life, where the payment period is condensed to maybe 5, 10 or 15 yrs, so you pay a higher amount but you can stop paying after.


There's so much vitriol against whole life that I thought I should make some statement FOR whole life, just to provide some yin to balance out the yang. The ultimate question is this: Will I buy a whole life plan now? The answer is no, but back then, I didn't know the following:


1. I'm a mighty saver. I can save a lot of my income away without external help. I know some people will spend a lot of their income away, so a whole life plan helps to 'lock up' that excess money away and give it back much much later. It's not ideal of course, but between a rock (not saving) and a hard place (not earning good returns on money), I think there needs to be a compromise. I know the rhetoric of buying term and investing the rest. But I think there is a group of people who will buy term and spend the rest. Whole life will help them a lot in this aspect. Back then, I didn't know which group I am in, but now I know. It's my hedge against my own 'money' character, if you will.

So, buy term invest the rest...but in real life, you might not save the rest. Nor invest it.


2. I can earn a respectable returns myself from investing. The second part about buying term and investing the rest is the investing part. Some people don't want to touch investment instruments at all, except perhaps for insurance and savings deposit. Not even bonds are under their radar. It could be ignorance, or fear or more likely a combination of experiential baggage that causes one to think like that. I'm sure you've heard of ultra conservative people like that. If so, then whole life presents a good investment for them. It might not be good enough for you, but it could be so for them. I don't buy into the idea that if you invest in a low cost fund, things will work out well for you. The stock market returns are never guaranteed. Nobody can guarantee you will earn 1% from the stock market if you put in for the long term. On the other hand, I've never heard of people losing money in whole life insurance, have you? The criticism is that one can earn better than whole life, but perhaps they forgot to mention they could have lost money in the process too.

So, buy term invest the rest will beat whole life returns, but that outcome is not guaranteed. A small guarantee might work better for an non-guaranteed but higher return.


3. I am disciplined. I think that sums up the characteristic of a term plan buyer. If you want to buy term plan, you better be disciplined in your spending and also your investments. If not, it's likely to reap the benefits of a buy-term-invest the rest strategy. It's like hiring a trainer for your gym. Can you do it yourself? Sure, all the information is out there, you just have to read and learn it on your own and execute it. But there will be days when you're not motivated and you just need someone to push you so that you can overcome the barrier. For a fee, of course. Not everyone is interested in financial and insurance matters and will gladly outsource it to others.



What I'm trying to say is that the process of discovering yourself takes time. In the meantime, you still have to work out the best decision based on the available information. Back then, my idea is to use whole life as a base and buy term to top up the coverage. When the term expires at 60 or 70, the whole life will still continue to provide coverage. I will then have to option to convert my whole life to annuity, cash out for retirement needs and/or continue the plan and provide a gift for dependents. Ironically, because of my whole life plan 'mistake' that everyone around me keeps telling me, I went to dig further into investment. I would say the 'mistake' started everything I know about financial stuff.

Interesting isn't it? Nothing is really 'wasted' in nature.

My philosophy now goes towards using term and self insurance. From whole life, to limited payment whole life, to term and to self insurance, I think I'm evolving just like a pokemon. I think life experience and mistakes are the candy needed to evolve yourself into a stronger pokemon with more CP lol!

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My plan for my wife when I pass away

While having lunch in a subway outlet, me and my wife started talking about something morbid. It's about our plans for each other when we pass away prematurely, like within the next few years. It wasn't a morbid topic for me though. I thought that we should talk about such issues so that we have a feel for each other's plan. In the eventuality that we pass away, we can do so in peace with the knowledge that the other party is well taken care off. That's the important part - to leave peacefully and to know that whoever we leave behind is well taken care off, at least financially.



When I pass away,

1. All the outstanding mortgage payments to HDB will be paid up for. That's like $450k we're talking about.


2. The death benefits from my insurance depends on how I pass away. If it's before 2023, it'll be $275k in total. If it's accidental death and I'm younger than 64 yrs old, it'll be $350k. If none of the above, it'll be $250k. Since we're talking about dying in the immediate future, let's just treat it as $275k.


I think my wife will have no problem taking care of the car loan which is about 10k. I haven't even included my bank accounts, stock portfolio and CPF money to the whole equation, but I'm pretty sure my parents and wife is well taken care financially. That's very good. But money isn't always the only problem that needs to be taken care of. Actually emotional and mental health is just as important.

With that in mind, I even thought out a plan for her:

1. With all the money left, she should just let it sit in the bank for a while and not touch it for at least 6 months to a year. This is the cooling off period to make sure that she don't use the money emotionally.


2. The 5 room HDB that we're currently staying is too big for her needs. She should not sell it but rent it out at maybe 2 to 3k if it's after 5 years of minimum occupation period. If it's before 5 years, ask her parents to stay over at my home and rent out her parent's home. This will free up cash to take care of her parents and also to generate positive cash flow for her own retirement.


3. Look for investment opportunities in the stock market or property investing. This will require the help and advice of my good bullythebear friends, whom she also keeps in constant contact. I'm sure she'll have the best advice from them. Get a small property if necessary, pay off enough as down payment to make sure that the rental from the HDB can cover a big percentage of the mortgage of the new property. This will ensure that in the event that the property market is not good after the purchase, she'll have enough to pay off the mortgage monthly without breaking a sweat.


4. Ask her immediate supervisor for a pay raise. If they refuse, just leave them and concentrate on those work that is satisfying for her. She probably don't have to work so hard for money anymore, so she should find something she likes to do to earn some income. Maybe like just work for 2 or 3 days in a week. No stress.


5. Use the time freed up to take care of her health by going to exercise more often, eat more healthily and bring herself and her parents/my parents overseas to enjoy life.


6. Find herself a good husband if she can, to take care of her.


Good plan? With all these 'morbid' thoughts in mind, I think I'll treasure my time here with her more.

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Home mortgage insurance

Not a lot of people talk about home mortgage insurance, so maybe I should start the ball rolling. This kind of protection is good if you have a mortgage for a property and you want to insure against the risk that you will strike the big three - critical illness (CI), death, total permanent disability (TPD) - while you are still paying the mortgage loan for the property. If it strikes you, then you don't have to pay for the proportion of the mortgage loan that you are covered by the home mortgage insurance. For example, if you opt to cover 50% of the total mortgage loan only under the insurance plan, then when you are struck by the big three, your part of the payment of the mortgage loan will be paid for by the insurance company. If you opt to cover 100% of the total mortgage loan, then the property will be paid fully. Another thing about home mortgage insurance plan is that it is a decreasing term plan. Decreasing means that the amount covered will decrease yearly, which is good because you paid up the mortgage every month so the amount of loan outstanding will also decrease. This should cause the premiums to be cheaper than say a level term. Term plan means that it will stop coverage by a certain age, usually 65 yrs or until the duration of the loan.

Since I bought a resale flat by HDB, they offered me their own brand of home mortgage insurance called the home protection scheme (HPS) offered by CPF. I ran into some problems during the health checkup phase (they sent me a letter saying that because my sum assured was too large, I'll have to go for health checkup) so I wasn't covered by the HPS eventually, though they told me I can re-apply again after 6 months with a report on my health status. That was when I began to check on private home mortgage insurance plans offered by insurance companies.

I found out some interesting observations by making some comparison between the quotations offered and the standard HPS plan. To make it transparent, I was comparing Prudential's PruMortgage against HPS for a 30 yr loan period, 100% coverage of mortgage loan. Here's what I found out:

1. I found out that HPS is more expensive than that by PruMortage. The premium for HPS is 27.1% more expensive compared to prudential. The absolute amount we're talking about is a few hundred dollars (<$200) per year.

2. To make a fairer comparison, I multiplied the premium of both plans by the number of years that you have to pay the premium i.e HPS is 27 yrs and prudential is 30 yrs. I found out that the total premiums paid for HPS is still more expensive than that offered by prudential. It's more expensive than prudential by 14.4%. The absolute amount works out to be 4 digit figure (in my case, it's less than 3k). I just realised that for prudential, there is no need to pay the premiums for the last three years of coverage. This is similar (but not the same) as HPS, which states that the last 10% of the yrs of coverage, you do not have to pay premiums. This means that for shorter mortgage duration (<30 yrs), the total amount of premiums paid for prudential should be lower than that of HPS. For 30 yrs loan period, there is no need to pay premiums for the last 3 yrs of coverage for both HPS and prudential.

I liberally took this from another blog : I hate to plan - http://www.ihatetoplan.com/

3. Actually, the difference in premiums isn't that much after considering the total premiums paid for both plans (for mine, it's less than 5k difference). But is the coverage similar too? A resolute no. For prudential, you can get a crisis waiver that is somewhat like a CI rider on top of the basic plans. The premiums are waived if the conditions for CI are met. This means that all the big 3 strikes are covered. What about the HPS? They only cover TPD and death. 

4. When the conditions for claims are met, the HPS do not give cash at all. It is paid directly to HDB and you will not touch the claim amount at all. For prudential's plan, you are paid in cash if the conditions for claim are met. This means that the options becomes more varied because you can treat the prudential plan like a normal term plan that insures against your health and death risk, besides insuring against the risk that you're unable to pay for the mortgage loan. I might choose to carry on this plan even after I've finished my mortgage and treat this as a normal term plan. Have to find out if this is possible.

5. The premiums for HPS is paid through CPF, so there is no cash outlay at all. However, the premiums for prudential's plan is paid through cash. I've no CPF contribution at all, so it doesn't really matter to me which payment mode is better. But I do suppose that this could be an important consideration, especially to those who have tight cash flow. If you can pay through CPF, that is one less thing to pay out of your pocket. I believe this could be the ultimate deal breaker to choose between HPS and other private home mortgage insurance plans.

Now, who would have thought that CPF's HPS would be more expensive than private home mortgage insurance plans? I certainly didn't think so. Do take note that I'm not a financial advisor nor do I pretend to be so. Without insulting my readers who are all discerning adults, I wish to lay down my disclaimer. The whole of this article are based on my possibly wrong interpretation of facts and analysis, so if you are interested, do find out more from someone certified and qualified.

*This article is contributed to IM$avvy financial portal, which is managed by Central Provident Fund Board and supported by MoneySense. This site has a noble aim of promoting financial literacy to the general population.

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Old people don't need life insurance?

I was browsing through some of the blogs when I saw Mr Tan's post on insurance. It's his usual style to advice people to buy term and invest the rest. But that doesn't attract me - it's this line:


"There is no need for people to have life insurance when they are old."


By 'life insurance', I take it that he means the whole life variety - those plans that gives a lump sum pay out in the event of death and total permanent disability of the insured person from the inception of the policy till age 100.  This is very different from the very much cheaper term plan where a similar lump sum pay out will be paid out but it is usually up to age 65. However, life insurance these days come along with a critical illness (CI) rider that allows a lump sum payment when it strikes. Since this rider 'rides' onto the main plan of the whole life, which is up to age 100, the CI cover will also be up to age 100. I am under the impression that CI stand alone cover up to age 100 is either exorbitant in price or does not exist.


What do we need when we're old?


I think we need a comprehensive, as-charged hospitalization and surgery plans (H&S) that covers the expenses if you are hospitalized. The key word here is that you must be hospitalized locally, otherwise the H&S plans do not cover them. Some had mentioned that instead of using the CI cover that is usually attached to whole life plans these days (and covers up to age 100), we can use the H&S plans to replace CI cover from age 65 and beyond. While it's true that H&S plans cover treatment of CI, it's also relevant that H&S covers expenses ONLY if you're hospitalized in local hospitals. If you remember Charmaine's case, the little girl had to seek alternative cancer treatment overseas because the local hospitals do not have this particular drug (pardon me if I remember the details incorrectly). The cost turns out to be 350k USD and this huge sum definitely cannot be covered in the H&S plans unless you bought one of those special ones (not to forget, expensive ones) that covers overseas hospitalization bills as well. A lump sum payout by the CI rider will be very helpful in such cases. Even if it's not for overseas treatment, the lump sum is good for covering expenses related to the critical illness outside of hospitals, which is currently not covered under the H&S plans.


(Of course, you might not be able to claim your CI even if you have CI, particularly with regards to cancer. This is because of the very stupid clause where the cancer had to be in the ending stages. I ask, if it's in the ending stages, why seek treatment? If it's not the ending stage, how do I get the payout to seek treatment? Catch 22...)

I've no idea why the doc and the man is so happy with the latter throwing away his money

Do old people need death payout? It's perfectly correct to say that when we're old, there is no more dependents. If your life insurance is planned for your dependents, then obviously you do not need it when there are no more dependents. In that case, getting a term plan is perfect because unless you have a kid beyond age 40, by age 65 your dependents would already have become independent. This makes the life policy meaningless. What about the cash value of whole life plans? It's really nothing much to shout for, because if you invest in equities related instruments, you'll probably end up getting more (or losing very badly). If you need to invest, don't buy a whole life plan obviously.


It thus appears that the one redeeming feature of whole life policy is the CI cover up to age 100. I faintly remember someone mentioning that if you start savings now and invest it wisely, by the time you need it after age 65, you can self-insure the costs, especially if you bought yourself a good H&S plan. What if I can't save enough or what if my savings are all lost in the bear market? I would insure against that possibility with a few layers of defense:


1. A fully paid up whole life plan with sufficient (but not overly high) CI cover to protect my savings from age 65 to age 100. This is to reduce the premium so that I can sustain the costs of maintaining the policy, which is not going to be cheap compared to term plans.

2. A good amount of savings.

3. Be darn good to my children so that if I need them to take care of me and I have the financial means to fund it, filial piety can be quite a given. These days, one has to provide the conducive environment for children to be filial - by being a good natured senior citizen and a financially 'okay' senior citizen.


What about now to age 65? Get a term plan lah, it has depth of coverage but do not have the length of coverage. Who says you have to buy term and invest the rest only? You can buy term, buy whole, save up and invest!

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For whom is the whole life insurance meant for?

Just for whom is the whole life insurance meant for?


I've heard a number of people saying that they don't want to buy whole life because when they get older, their dependents would have grown up and thus there's no need to cover them anymore. The alternative is thus the term life plan because it's cheaper. This seems to suggest that the whole life plan is just for the coverage of their dependents in case the sole breadwinner (the person insured whose life is insured by the whole life policy) passed away.


My post here is to question that very assumption - that the whole life plan policy is to cover dependents in case you pass away prematurely, thus leaving them with a huge lump sum.


I do not use the whole life for such purpose. There are cheaper alternatives for such lump sum gift for those loved ones you leave behind to take care of financial matters. I propose that a whole life plan can be used to protect your own savings that had been built up thus far, from events that can erode it considerably. Events such as cancer, stroke, heart attacks and any other events that are debilitating yet not fatal immediately. In this sense, whole life policy will act like compulsory savings to force you to save up for such events.


Term plan can work the same, yes. But the catch is that term plan coverage only last around 60 yrs whereas whole life plan cover for an extended period till 100 yrs old.

So what happens between the years when your term plan coverage ceases? I think whole life can be used precisely for that purpose - to cover for the period when your term plan no longer covers you, until the day you pass on.


If something strikes you after 60 yrs old, and you do not have whole life coverage, someone will have to foot the bill. There are hospital and surgical fees to take care of, and there are other fees that had to be incurred that do not require hospital stay. Only the former are covered by H&S plans, so what about the latter? Things like non-standard drugs, stay home nurses and maid, overseas treatment....who is going to pay for them? The H&S plans do not cover things like that and I do not want to burden my spouse, relatives or dependents, so I have to depend on myself. But I do not trust myself that I can save up enough for such purposes, hence a whole life plan is critical for me to hedge against my own ability to prepare for such events.


I think of my own situation. I am sandwiched between two parties - the needs of my parents and the needs for myself. I've to buy insurance for my parents because they only have enough savings to take care of themselves if nothing extraordinary happens. If something is to happen, it will firstly wipe out all their retirement savings and secondly tap into my savings too.


They told me if something bad is to happen to them, I don't have to treat them because there's no point. I do not think I can do that. Can anybody do that? Not me. I only have limited amount of savings to handle my own affairs. If I have to help my parents, who would foot the bill for me if something is to happen to me? My dependents? Then this whole cycle will repeat again!!


I'm not a saviour nor a hero to rescue my future generations from this vicious cycle. I'm just a normal person struggling to make good on my dual duty as both a kid to my parent and a parent to my kids. It is only responsible for my kids to be born into this world without the excess baggage of the previous generation. I might not be able to do it, but hey, guess what, I'm doing my best.


It's also a bit too much to ask for a product to cover all of this stuff that I've talked about. It's not possible. I'll try to cover as many loopholes as I can foresee and do my best to steer my ship as danger free as I possibly can.

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Do note that I'm not a financial advisor. Of course I'm not. I'm just trying to make sense of all the debate here and there and reason out for myself on the actual purpose of certain insurance policies. I believe that no financial advisor can do that for you - you've got to think and reason it out for yourself. I do not presume to think for everyone, because my situation is uniquely mine. So do not follow me, because I'm not your leader. Do not walk ahead of me, because I might not be able to follow you. Do however, walk beside me as a friend, so that we can all share and discuss all our interesting life experiences together.

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Builders and destroyers

I'm always a big fan of this site : Wulffmorgenthaler. The humor is not slapstick but it slowly grows on you. I like the site's style of tragicomedy.

A few days ago, I came upon this strip from the same site, which I've cut and paste liberally. It looked like this:




How apt, isn't it? I always believed that in this world, there are two types of people - builders and destroyers. Builders have the harder life of starting things from scratch, so that other people can enjoy the fruits of their labor. Destroyers are those people who enjoy the fruits grown by others. But these are just extreme stereotypes - most people fall in between these.

I've seen parents who are on the left, shown in the picture. These parents give their kids a good head start in life, so that they can see further by standing on the shoulders of giants that came before them. Good for the kids, bad for the parents, financially. I will strive to be this kind of parents, though not entirely so. I'm willing to take the shit needed to put the kids in a good head start, but they must also be willing to take shit themselves. There is value in doing shit work - and thus the kid have to learn the lessons themselves.

I've also seen parents who are on the right. My limited life experience tells me that there are more such parents than those on the left. I'll share one example here.

J has a elder sister, so her parents have two kids in total. Since the elder sister already married 'out', while J is still single, she is 'more' responsible for taking care of her parents' financial needs. (I quote certain words because I can never agree to them!!) J's dad stopped work as soon as the youngest child, J, started work after her graduation in a local university. They do not have much savings, much less insurance, and they demand a good amount of pocket money from her kids. Since J's elder sister has a family, J, being single, has to shoulder a heavier burden. This is quite unfair isn't it? J cannot save up for herself because she has to support two irresponsible parents (sorry, but I simply cannot find a better term), and she don't even dare to get married because the financial burden is just too much for her to handle.

When I saw the comic strip above, I immediately thought of J's situation.

It's one thing not to take care of yourself, but another if you are a liability to others, especially your own kids. It's extremely frustrating to cover 3 generations of people and take care of their needs. Which are the 3 generations?

1. Cover your parents' needs
2. Cover yourself and your spouse's retirement needs
3. Cover your kids' needs

Money is a limited resource, so which one is the priority? Most likely for me, it's 2, 1, then 3, in that particular order of importance. What to do, I'm a builder. Thus I'll have to work harder in my time for others to enjoy.

Just bring a bottle of wine next time I whine.

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Endowment plan option for education fund

I was here and there discussing endowment plan, as a viable option to save up for child's education, with a few other bloggers. I had already shared my views in my previous posting here, so I would just like to substantiate with actual benefit illustrations. I would withhold the actual benefit illustrations, but will put up a summary of three companies that my very hardworking girlfriend had put up for me. She did the entire comparison herself, kudos to her!

A few key assumptions:

1. The endowment plan is bought on the life of my hypothetical kid, aged 1 on the next birthday

2. The proposer of the plan is me, aged 33 on my next birthday, non-smoker

3. The plan is bought with a rider, which waives off all future premium in the event that the proposer (aka me) kena death, TPD or CI

4. The plan has a sum assured of 30k over a duration of 20 yrs.

Okay, with the key assumptions laid out, here's the summary of the three plans that my gf had done up for me. I will mosaic the names of the three companies mentioned. If you need their names, liase with me and I'll fix you up with my gf. She's an independent financial advisor, just to sell her koyok here.


Let's just assume another thing - that the cost of university (local) in the next 20 yrs will be 50k. Actually it's more like 70k or above, but let's not debate about this for now. This is how I would plan for my kid:

1. Since I need 50k at the end of 20 yrs, I would want the endowment plan to cover 30k, or just a percentage of the full amount. Why? Because I believe that I can get a better rate than what endowment can give me, YET at the same time, I want to be sure that my child still gets the money for university IN CASE my investment sucks. I cover my downside.

2. Notice that I only look at a projected returns of only 3.75%, not any higher. On paper, you can put 5% or 10%, but if you plan with that higher projected sum in mind, AND you did not manage to get it, the consequence would be too much for me to bear. Thus, I would rather assume that the insurance companies are all sucky at investing my money. I like pleasant surprises, not shock.

3. Since I want to cover 30k of the education money with endowment plans, I only intend to look at the guaranteed part. Thus, I'm implicitly assuming that the insurance are so sucky at their investments that they give 0% projected. Worst case, I get the guaranteed amount of money (which is a losing situation due to the time value of money).

There are thus two ratios to look at:

A. Guaranteed portion / total premiums paid

B. Guaranteed portion / total returns at 3.75% projected (inclusive of guaranteed + non-guaranteed part)

The first ratio A gives me a rough guide of whether the deal is good. Screw the time value of money for now...this ratio just tells me at a glance if the amount of guaranteed money I get at maturity is more than the amount of money that I put in. Of course you'll want this ratio to be as above 100% as possible. Anything which is lower than 100%, I'll think twice.

The second ratio B gives me a indication of how safe the endowment is. If the guaranteed part takes up a higher % of the total returns projected at 3.75%, then it's safe. The company can screw up big time without affecting your plans so much.

The ratios for the 3 companies are as follows:

Company----------Ratio A------Ratio B
---A---------------103.89%------80.97%
---B---------------101.65%------76.09%
---C----------------86.61%-------62.40%

I give no shit about projected values. It's about as accurate as projecting what the weather will be like 20 yrs down the road. In my conservative plan, guaranty is king. You can complain until the cows come home that the projected yield is different from actual yield, but if the guaranteed part is 1 ct lesser than stated, you can sue the bugger until he gives you the balance.

I'm actually quite prepared to put 30k of premiums and getting 30k of guaranteed at the end of 20 yrs. Why? There's this very important feature in endowment plan that no other instrument can beat - waiver of future premiums in the event of TPD, CI, death. When shit happens and you're no longer around, how are you going to save for your kid? This waiver of premium ensures that your intention to put the child through university education is fulfilled no matter whether you're alive or not. If insurance company go belly up, then LL.

In life, I try to reduce as many variables as possible. I throw away inflation, I throw away projected yield, I throw away the market's up and down, I throw away everything except how much I want to pay and how much I'm going to get (guaranteed) at the end of 20 yrs. Life is simple when I only look at 2 variables.

I would choose company A. So that settles the 30k out of 50k planned. What about the 20k remaining? I would do it through savings, my own investments, and other sources. I'm not going to stake my entire plan on the survivability of a single company.

So how's my plan? Will work or not?

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Savings in life policy

I was looking at Tan Kin Lian's blog. He was lamenting on the poor returns of life policy (meaning whole life insurance). He mentioned that it will breakeven after 15 yrs and the returns are somewhat in the range of 3% to maybe 4%. I've some thoughts about it and I would stress that this post is not to criticize him, but rather to voice out my opinions on the same matter.

I totally agree with Mr.Tan that whole life returns is not fantastic. Buying a whole life insurance is certainly not the best way to maximise your returns. But I think those who buy whole life insurance to save up is missing the big picture. One of the most prominent advantage of using whole life, as opposed to term insurance, is that you are covered until til 100 yrs (plus minus), whereas term life covers you until age 60 (plus minus again). If you think that you only need to cover yourself until age 60, then why buy a whole life plan for? If you intend to cash out the returns from a whole life plan, then why buy a whole life plan for?

I believe no products are bad. It's just a mis-match between the problems that you intend to solve and the solutions you used to solve it. If you need better returns, then don't buy a whole life plan, buy something that gives you better returns. If you hire a maths tutor, but complain to the maths tutor that the science results are bad, I think you need to hire a science tutor, not a maths tutor.

Now, I would be totally pissed off if there is misrepresentation though. If the whole presentation during the sale of the whole life is about being about to save a PROJECTED 8% (for example only), then something needs to be done to the industry. Then again, projected returns are just that...it's looking at a crystal ball and soothsaying what will happen in a very long timeframe. If it doesn't happen, too bad. Do you blame the soothsayer or the person who believes in them?

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