1) a simple term coverage from NTUC of 40K and leaving the premium in a 0.25% savings account.
2) a 5% return investment.
You can buy online the NTUC term insurance at: https://appsonline.income.com.sg/uiTermLife/
It took me ten minutes and the premium for 40K is only $3.60/mth ($43.20/yr), and covers $2,000 more than my GE policy of 38K.
Columns definitions:
B: Yearly premium payable to GE, for 10 years.
C: Surrender value according to the policy contract.
D Premium payable to NTUC for a term insurance, also covering death, but without any surrender value. The coverage taken from NTUC to match GE Death benefit is can be found at column I
E: Column B - D, which means leave the money in a standard savings account, after deducting the NTUC premium.
F: Money lost to GE if you exit the contract. 30% goes in the pocket of the insurance agent, the rest, GE's profit.
G: Instead of leaving the money in savings account, what would be the return of a 5% investment.
There are some examples of moderate risk funds that return 5% at the bottom of this post.
H: Amount retrieved in case of death for the NTUC Term + Savings (always higher than the 38K GE protection)
K: Monthly premium for the NTUC Term. If can be found in NTUC Brochure
Unable to include the "cash bonus" in the table, as there is no value in the policy. Anyway, the cash bonus will not help to break-even within the 10 (and probably not even within 20) years given the huge sales and mgt cost.
Files:
Excel Worksheet
GE Policy
NTUC Brochure
Examples of fund that return 5% with moderate risk:
https://secure.fundsupermart.com/main/fundinfo/viewFund.svdo?sedolnumber=PPMIPM
https://secure.fundsupermart.com/main/fundinfo/viewFund.svdo?sedolnumber=PAM073
Of course the capital is not guaranteed and this is NOT an advice to invest in these funds.
The only advice here is that you are better off leaving your money in your savings account, buy a cheap term insurance from NTUC, which covers the same, than investing in a Life Insurance from Great Eastern.
I have not tried life insurance from other local insurers, so I am unable to comment about them. They may be equally bad, your may share your experience in the blog's comments.
There are some examples of moderate risk funds that return 5% at the bottom of this post.
H: Amount retrieved in case of death for the NTUC Term + Savings (always higher than the 38K GE protection)
I: NTUC Term coverage, just the amount needed to match the GE death benefit in complement to the savings. Once the savings reach 20K, we only need to get a 20K term from NTUC to match the 38K coverage from GE.
J: age of the insured, needed to get the exact NTUC premiumK: Monthly premium for the NTUC Term. If can be found in NTUC Brochure
Unable to include the "cash bonus" in the table, as there is no value in the policy. Anyway, the cash bonus will not help to break-even within the 10 (and probably not even within 20) years given the huge sales and mgt cost.
Files:
Excel Worksheet
GE Policy
NTUC Brochure
|
A
|
B
|
C
|
D
|
E
|
F
|
G
|
H
|
I
|
J
|
K
|
|
Year
|
GE Premium Paid
|
GE Surrender Value
(per 1K * 38) |
NUTC Premium Paid
|
Savings Acc 0.25%
|
Money lost to GE
(C - E) |
5% Investment
|
NTUC + Savings Death Benefit
|
NTUC Term Coverage
|
Age
|
Associated Premium
|
|
1
|
3,490.00
|
-
|
$43.20
|
3,446.80
|
(3,446.80)
|
3,446.80
|
43,446.80
|
40000
|
32
|
$3.60
|
|
2
|
6,980.00
|
-
|
$86.40
|
6,902.22
|
(6,902.22)
|
7,065.94
|
46,902.22
|
40000
|
33
|
$3.60
|
|
3
|
10,470.00
|
3,952.00
|
$118.80
|
10,377.07
|
(6,425.07)
|
10,876.84
|
40,377.07
|
30000
|
34
|
$2.70
|
|
4
|
13,960.00
|
5,662.00
|
$151.20
|
13,860.62
|
(8,198.62)
|
14,878.28
|
43,860.62
|
30000
|
35
|
$2.70
|
|
5
|
17,450.00
|
7,448.00
|
$187.20
|
17,349.27
|
(9,901.27)
|
19,076.19
|
47,349.27
|
30000
|
36
|
$3.00
|
|
6
|
20,940.00
|
9,310.00
|
$211.20
|
20,858.64
|
(11,548.64)
|
23,496.00
|
40,858.64
|
20000
|
37
|
$2.00
|
|
7
|
24,430.00
|
11,248.00
|
$235.20
|
24,376.79
|
(13,128.79)
|
28,136.80
|
44,376.79
|
20000
|
38
|
$2.00
|
|
8
|
27,920.00
|
13,262.00
|
$259.20
|
27,903.73
|
(14,641.73)
|
33,009.64
|
47,903.73
|
20000
|
39
|
$2.00
|
|
9
|
31,410.00
|
16,454.00
|
$271.20
|
31,451.49
|
(14,997.49)
|
38,138.12
|
41,451.49
|
10000
|
40
|
$1.00
|
|
10
|
34,900.00
|
19,418.00
|
$286.80
|
35,004.52
|
(15,586.52)
|
43,519.43
|
45,004.52
|
10000
|
41
|
$1.30
|
|
11
|
34,900.00
|
19,570.00
|
$302.40
|
35,076.43
|
(15,506.43)
|
45,695.40
|
45,076.43
|
10000
|
42
|
$1.30
|
|
12
|
34,900.00
|
19,722.00
|
$318.00
|
35,148.52
|
(15,426.52)
|
47,980.17
|
45,148.52
|
10000
|
43
|
$1.30
|
|
13
|
34,900.00
|
19,874.00
|
$333.60
|
35,220.79
|
(15,346.79)
|
50,379.18
|
45,220.79
|
10000
|
44
|
$1.30
|
|
14
|
34,900.00
|
20,026.00
|
$349.20
|
35,293.24
|
(15,267.24)
|
52,898.14
|
45,293.24
|
10000
|
45
|
$1.30
|
|
15
|
34,900.00
|
23,978.00
|
$370.80
|
35,365.88
|
(11,387.88)
|
55,543.05
|
45,365.88
|
10000
|
46
|
$1.80
|
|
16
|
34,900.00
|
24,168.00
|
$392.40
|
35,432.69
|
(11,264.69)
|
58,320.20
|
45,432.69
|
10000
|
47
|
$1.80
|
|
17
|
34,900.00
|
24,358.00
|
$414.00
|
35,499.67
|
(11,141.67)
|
61,236.21
|
45,499.67
|
10000
|
48
|
$1.80
|
|
18
|
34,900.00
|
24,586.00
|
$435.60
|
35,566.82
|
(10,980.82)
|
64,298.02
|
45,566.82
|
10000
|
49
|
$1.80
|
|
19
|
34,900.00
|
24,814.00
|
$457.20
|
35,634.14
|
(10,820.14)
|
67,512.92
|
45,634.14
|
10000
|
50
|
$1.80
|
|
20
|
34,900.00
|
25,004.00
|
$487.20
|
35,701.62
|
(10,697.62)
|
70,888.57
|
45,701.62
|
10000
|
51
|
$2.50
|
|
21
|
34,900.00
|
25,232.00
|
$517.20
|
35,760.88
|
(10,528.88)
|
74,433.00
|
45,760.88
|
10000
|
52
|
$2.50
|
|
22
|
34,900.00
|
25,460.00
|
$547.20
|
35,820.28
|
(10,360.28)
|
78,154.65
|
45,820.28
|
10000
|
53
|
$2.50
|
|
23
|
34,900.00
|
25,650.00
|
$577.20
|
35,879.83
|
(10,229.83)
|
82,062.38
|
45,879.83
|
10000
|
54
|
$2.50
|
|
24
|
34,900.00
|
25,878.00
|
$607.20
|
35,939.53
|
(10,061.53)
|
86,165.50
|
45,939.53
|
10000
|
55
|
$2.50
|
|
25
|
34,900.00
|
26,106.00
|
$651.60
|
35,999.38
|
(9,893.38)
|
90,473.77
|
45,999.38
|
10000
|
56
|
$3.70
|
|
26
|
34,900.00
|
26,334.00
|
$696.00
|
36,044.98
|
(9,710.98)
|
94,997.46
|
46,044.98
|
10000
|
57
|
$3.70
|
|
27
|
34,900.00
|
26,562.00
|
$740.40
|
36,090.69
|
(9,528.69)
|
99,747.33
|
46,090.69
|
10000
|
58
|
$3.70
|
|
28
|
34,900.00
|
26,790.00
|
$784.80
|
36,136.52
|
(9,346.52)
|
104,734.70
|
46,136.52
|
10000
|
59
|
$3.70
|
|
29
|
34,900.00
|
27,018.00
|
$829.20
|
36,182.46
|
(9,164.46)
|
109,971.43
|
46,182.46
|
10000
|
60
|
$3.70
|
|
30
|
34,900.00
|
27,246.00
|
$889.20
|
36,228.51
|
(8,982.51)
|
115,470.01
|
46,228.51
|
10000
|
61
|
$5.00
|
|
31
|
34,900.00
|
27,474.00
|
$949.20
|
36,259.08
|
(8,785.08)
|
121,243.51
|
46,259.08
|
10000
|
62
|
$5.00
|
|
32
|
34,900.00
|
27,702.00
|
$1,009.20
|
36,289.73
|
(8,587.73)
|
127,305.68
|
46,289.73
|
10000
|
63
|
$5.00
|
|
33
|
34,900.00
|
27,968.00
|
$1,069.20
|
36,320.46
|
(8,352.46)
|
133,670.97
|
46,320.46
|
10000
|
64
|
$5.00
|
|
34
|
34,900.00
|
28,196.00
|
$1,129.20
|
36,351.26
|
(8,155.26)
|
140,354.51
|
46,351.26
|
10000
|
65
|
$5.00
|
|
35
|
34,900.00
|
28,424.00
|
$1,129.20
|
36,382.14
|
(7,958.14)
|
147,372.24
|
36,382.14
|
0
|
66
|
0
|
|
36
|
34,900.00
|
28,690.00
|
$1,129.20
|
36,473.09
|
(7,783.09)
|
154,740.85
|
36,473.09
|
0
|
67
|
0
|
|
37
|
34,900.00
|
28,918.00
|
$1,129.20
|
36,564.27
|
(7,646.27)
|
162,477.90
|
36,564.27
|
0
|
68
|
0
|
|
38
|
34,900.00
|
29,146.00
|
$1,129.20
|
36,655.69
|
(7,509.69)
|
170,601.79
|
36,655.69
|
0
|
69
|
0
|
|
39
|
34,900.00
|
29,374.00
|
$1,129.20
|
36,747.32
|
(7,373.32)
|
179,131.88
|
36,747.32
|
0
|
70
|
0
|
|
40
|
34,900.00
|
29,602.00
|
$1,129.20
|
36,839.19
|
(7,237.19)
|
188,088.47
|
36,839.19
|
0
|
71
|
0
|
Examples of fund that return 5% with moderate risk:
https://secure.fundsupermart.com/main/fundinfo/viewFund.svdo?sedolnumber=PPMIPM
https://secure.fundsupermart.com/main/fundinfo/viewFund.svdo?sedolnumber=PAM073
Of course the capital is not guaranteed and this is NOT an advice to invest in these funds.
The only advice here is that you are better off leaving your money in your savings account, buy a cheap term insurance from NTUC, which covers the same, than investing in a Life Insurance from Great Eastern.
I have not tried life insurance from other local insurers, so I am unable to comment about them. They may be equally bad, your may share your experience in the blog's comments.
it seems there is a free lock period, so you may cancel the policy if you regret?
ReplyDeleteYes, I cancelled the policy and GE refused to refund any of the premium. Which is still better than keeping it as the loss just keeps growing over time.
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What is the name of the insurance policies you bought from GE and NTUC respectively?
ReplyDeleteYou should also add in the cash value of the life policy you bought for fairer comparison, as most people who buy life policy would definitely keep it for life rather than surrendering it.
NTUC iterm.
DeleteThat's precisely my point. With a life insurance you lock your money for life and get poor returns. If you compare to CPF the returns of a life insurance plan are pathetic. If you compare with any riskier investment like funds over the same period it gets even worse.
Stay away from life insurance, there are much better way to get protection + returns and without locking your money.
Hi Andre,
ReplyDeleteI do think there are a few other pointers to consider. If life insurance was that much of a drag the business would have died off by now.
Firstly term insurance is a very cheap option for youngsters for a bulk of coverage but the cost goes up as you age. Ntuc plus! Term only covers till age 65 so if you do not make claims till then all your premiums till date would be "wasted" as opposed to a life insurance policy which has a surrender value. (I've seen the forecasted returns on this value which is about 4% for GE annually consistently) So to speak, after age 65 you are no less than a naked mole rat running around without protection.
From the price of the premiums you paid for GE's life insurance for a mere sum of 38k sum assured I can tell that you are not very young, probably mid or late thirties. Life insurance is something we buy as young as possible because risk goes up for the insurer as we age.
And also this policy does not cover critical illness either? So if you aren't okay with not receiving money should you fall ill, and if 40k is enough to keep your obligations and debts going should you pass on prematurely or become disabled then you might want to consider a larger sum assured.
You mentioned 5% moderate risk funds as an alternative to invest but as you have mentioned these funds are NOT guaranteed. Savings accounts give you a 0.25% return? These returns can't even beat inflation. Definitely nowhere near as attractive as the savings plan I have going on which gives me about 3% consistently. The lockup period you speak of is irrelevant since I only fork out about 200/month for it.
As for the life insurance portion I am getting 300k coverage for about 3k annually.
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