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Thread: Universal life plan , premium legacy from AIA

  1. #1
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    Default Universal life plan , premium legacy from AIA

    I have been thinking for months whether to buy universal life plan to leave some money for my 2 sons when I am not around. Beside property, Universal life plan is another gift to leave for my 2 sons. .
    I finally decide to buy a universal life plan from AIA. Due to my so call good health after the medical screening. I am given 6.5% discount.

    Insured amt = US$1,000,000.
    Initial premiun = US$261,000
    Premium class = Preferred
    Rate on initial premium for 1st 7 yrs = 4%

    I will be borrowing against my portfolio to pay for my US$261k premium.
    Borrowing cost is est 1.06% now.


    rdgs
    Vic

  2. #2
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    this insurance can pass on to your sons?
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  3. #3
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    Quote Originally Posted by roly8
    this insurance can pass on to your sons?
    Only Money can pass to my son through a will when I am not around. Not policy. Prudential insurance may hv this type of policy where U can pass it to your children. Need to find out more from prudential.

  4. #4
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    Interesting.....

    Can you share a bit of what this is all about?

    Thanks

  5. #5
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    Better check with Mr. Tan Kin Lian first before making a decision. He is an insurance expert and will evaluate your insurance plan objectively at a small fee.

    www.fisca.sg

    Most likely he will ask you to invest in STI ETF instead. The annual yield of STI ETF (inclusive of dividends) is more than 9%.

    Quote Originally Posted by cbsh38584
    I have been thinking for months whether to buy universal life plan to leave some money for my 2 sons when I am not around. Beside property, Universal life plan is another gift to leave for my 2 sons. .
    I finally decide to buy a universal life plan from AIA. Due to my so call good health after the medical screening. I am given 6.5% discount.

    Insured amt = US$1,000,000.
    Initial premiun = US$261,000
    Premium class = Preferred
    Rate on initial premium for 1st 7 yrs = 4%

    I will be borrowing against my portfolio to pay for my US$261k premium.
    Borrowing cost is est 1.06% now.


    rdgs
    Vic
    Last edited by MLP; 05-03-13 at 19:14.

  6. #6
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    most people will recommend term insurance
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  7. #7
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    Be a bit more hard working. Buy term the rest quarterly buy STI ETF . N re invest the dividen
    “Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”
    ― Martin Luther King, Jr.

    OUT WITH THE SHIT TRASH

    https://www.facebook.com/shutdowntrs

  8. #8
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    Quote Originally Posted by roly8
    most people will recommend term insurance
    I agree.
    I prefer term insurance.
    Cos when the kids are financially independent, I will terminate it.

    Legacy planning, I can't enjoy the legacy I planned and why should I continue to insure myself when my kids have their own money.
    I would rather use the money to enjoy my retirement.

    Worse of all, if the kids become unfilial, with legacy planning, you know what they are going to wish for .

  9. #9
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    Quote Originally Posted by MLP
    Better check with Mr. Tan Kin Lian first before making a decision. He is an insurance expert and will evaluate your insurance plan objectively at a small fee.

    www.fisca.sg

    Most likely he will ask you to invest in STI ETF instead. The annual yield of STI ETF (inclusive of dividends) is more than 9%.
    That is why I only buy US$1,000,000.I want to spread my investment risk.

    rdgs,
    Vic

  10. #10
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    Quote Originally Posted by buttercarp
    I agree.
    I prefer term insurance.
    Cos when the kids are financially independent, I will terminate it.

    Legacy planning, I can't enjoy the legacy I planned and why should I continue to insure myself when my kids have their own money.
    I would rather use the money to enjoy my retirement.

    Worse of all, if the kids become unfilial, with legacy planning, you know what they are going to wish for .

    I hv 2 beautiful sons. When I see their faces. It motivate me to leave something for their future without letting them know 1st.

    I will hv my own retirement plan for my wife & I. I am looking in retirement life plan from tokio marine insurance. But the premium is too expensive.

    Pay 300k/yr for 5 yrs = Total S$1.5m.
    Only At age 60, I will get guarantee S$100k/yr cheque . If my wife & I can leave till age 99, I will be collecting a TL of S$3.9m (age 60 to 99=39 yrs). If my wife & I are no longer around at age 100, my 2 sons will get another >S$3.2m death benefits. Look very attractive retirement plan but premium too high , S$1.5m.

    rdgs,
    Vic

  11. #11
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    Quote Originally Posted by cbsh38584
    I hv 2 beautiful sons. When I see their faces. It motivate me to leave something for their future without letting them know 1st.

    I will hv my own retirement plan for my wife & I. I am looking in retirement life plan from tokio marine insurance. But the premium is too expensive.

    Pay 300k/yr for 5 yrs = Total S$1.5m.
    Only At age 60, I will get guarantee S$100k/yr cheque . If my wife & I can leave till age 99, I will be collecting a TL of S$3.9m (age 60 to 99=39 yrs). If my wife & I are no longer around at age 100, my 2 sons will get another >S$3.2m death benefits. Look very attractive retirement plan but premium too high , S$1.5m.

    rdgs,
    Vic
    Children are beautiful when young.
    All children are innocent and deserve the best from their parents.
    The problem may arise when they grow up and get married.

    Wow, the tokio marine is really expensive!
    How can we be sure that it will be around to honour its promise in the next few decades?
    It is a good policy if you can afford comfortably its premium and live to a ripe of age.

  12. #12
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    don't let them know you prepared the stuff for them. in case they become too reliant.

  13. #13
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    What if US$ keep depreciating given their debt and printing of US$ when you sons get them?
    Quote Originally Posted by cbsh38584
    I hv 2 beautiful sons. When I see their faces. It motivate me to leave something for their future without letting them know 1st.

    I will hv my own retirement plan for my wife & I. I am looking in retirement life plan from tokio marine insurance. But the premium is too expensive.

    Pay 300k/yr for 5 yrs = Total S$1.5m.
    Only At age 60, I will get guarantee S$100k/yr cheque . If my wife & I can leave till age 99, I will be collecting a TL of S$3.9m (age 60 to 99=39 yrs). If my wife & I are no longer around at age 100, my 2 sons will get another >S$3.2m death benefits. Look very attractive retirement plan but premium too high , S$1.5m.

    rdgs,
    Vic

  14. #14
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    Quote Originally Posted by DC33_2008
    What if US$ keep depreciating given their debt and printing of US$ when you sons get them?
    I am borrowing USD dollar @1.06% to pay for my premium. I dont convert my SGD cash into USD. Not worth it.

    Borrowing cost is below US$2.8k/yr for USD$1m whole life protection with return until death. My friend paid S$6000/yr for SGD$1m term insurance protection with NO return from Prudential until age 99. So which plan is better . Universal life plan or term insurance from Prudential.

    if U buy universal life plan, U must be able to borrow US dollar. If not, better dont buy.

    rdgs,
    Vic

  15. #15
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    Quote Originally Posted by cbsh38584
    I am borrowing USD dollar @1.06% to pay for my premium. I dont convert my SGD cash into USD. Not worth it.

    Borrowing cost is below US$2.8k/yr for USD$1m whole life protection with return until death. My friend paid S$6000/yr for SGD$1m term insurance protection with NO return from Prudential until age 99. So which plan is better . Universal life plan or term insurance from Prudential.

    if U buy universal life plan, U must be able to borrow US dollar. If not, better dont buy.

    rdgs,
    Vic
    Same age term insurance protection premium is different man/woman
    =============================================
    SGD$1m term insurance protection premium is SGD$6k for a woman.
    SGD$1m term insurance proetction premium is est SDG$10k for a man.

    So for Universal life plan USD$1m whole life protection with return & with borrowing. I pay only US$2.8k or SGD$3450

    If I will to buy a term inusrance SGD$1m, I need to pay est SGD$10k/yr
    with no return. Protection till age 99 only. If I live till age 100. Policy lapse. My children get nothing.


    So which plan is better ? Universal life plan protection (age >150) with return (SGD$3.45k/yr premium) Vs term insurance SGD$1m protection (till age 99) with NO return (SGD$10k/yr premium)

    I did a study for month. This is what I found out. I maybe wrong in my above assumption calculation.


    rdgs,
    Vic

  16. #16
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    What is the return? 4%pa guaranteed?

    Term insurance premium depends on age bracket right? Just like medishield premium and get higher as one grow older. Term insurance usually cover 30 major illness on top of usual death and tpd. Your universal policy same coverage too?

  17. #17
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    Quote Originally Posted by cbsh38584
    ......
    So which plan is better ? Universal life plan protection (age >150) with return (SGD$3.45k/yr premium) Vs term insurance SGD$1m protection (till age 99) with NO return (SGD$10k/yr premium)

    .....
    how come you don't include in your calculation the initial premium for universal life?
    assuming average age is 80, u pay us$2.8k x30years + 261k = 345k
    % return is 1mil/345k = 2.9x

    if term insurance, 6k x 30 years = 180k
    % return is 5.5x

    what do you mean by age > 150?

  18. #18
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    Quote Originally Posted by hopeful
    how come you don't include in your calculation the initial premium for universal life?
    assuming average age is 80, u pay us$2.8k x30years + 261k = 345k
    % return is 1mil/345k = 2.9x

    if term insurance, 6k x 30 years = 180k
    % return is 5.5x

    what do you mean by age > 150?
    He borrowed the initial lump sum premium and do not have to pay annual premium anymore.

  19. #19
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    Quote Originally Posted by Rosy
    He borrowed the initial lump sum premium and do not have to pay annual premium anymore.
    thanks,
    then if he died at 80,
    returns would be 1mil - 261k = 739k
    interest paid = 2.8 x 30 = 84k
    his returns would be 8.8x

    that would seem to be a good bet.
    however if average interest rates for 30 years is 3% for example,
    interest for 30 years is 235k
    returns would be 739/235 = 3.1x

    if at anytime, he has to cough up cash, then maximum return would be that
    1mil/261k = 3.8x.

    returns on universal too dependent on interest rates.

    personally,i would prefer term insurance, shorter term (not until 99), so cheaper premium. returns higher.

  20. #20
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    Yes i also prefer cheap term insurance coverage till 70yo on top of regular whole life policy.

    For those between 31-40,1mil term insurance till 70yo should cost around $2400 a year. However the premium surge up after 50yo

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    How does STI ETF works?

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    Quote Originally Posted by Rosy
    He borrowed the initial lump sum premium and do not have to pay annual premium anymore.
    Insured amt = US$1,000,000.
    Initial premiun = US$261,000
    Premium class = Preferred
    Rate on initial premium for 1st 7 yrs = 4%

    I will be borrowing against my portfolio to pay for my US$261k premium.
    Borrowing cost is est 1.06% now (US$2.7k or SGD$3.45k).


    Universal life plan Vs Term insurance
    ============== ==========
    Sum insured US$1,000,000 SGD$1,000,000
    Premium US$2.7 or S$3.45k /yr est S$10k/yr
    Protection age inifinity Max age 99 (age100 lapse)
    Return There is a return No return at all
    Trust Free if >US$2m U need to pay yrly if U want


    I hv been quite curious for past 2 yrs why the rich & smart people are borrowing money to buy Universal life plan ( USD5 to 10 million). Why must be in USD ? Why not SGD as US dollars maybe depreciate in long run?. I need to come out one lump sum single premium for universal life plan is a huge amt. Why not just buy a term insurance which is cheaper where U pay yearly.

    I start to realise when I ask around & compare with my friends who bought term insurance. I find that by borrowing to finance my Universal life plan. I am actually paying less than a term insurance + many advantage for protetction as shown above.

    So if U will to buy univeral life plan. U must be able to borrow USD which is very low now to finanace the universal life plan. This is how the rich & smart people did it. I just follow what they do.


    rdgs,
    Vic

  23. #23
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    Insured amt = US$1,000,000.
    Initial premiun = US$261,000
    Premium class = Preferred
    Rate on initial premium for 1st 7 yrs = 4%

    I will be borrowing against my portfolio to pay for my US$261k premium.
    Borrowing cost is est 1.06% now (US$2.7k or SGD$3.45k).


    Universal life plan Vs Term insurance
    -------------=---------------------------------------
    Sum insured US$1,000,000 Vs SGD$1,000,000

    Premium US$2.7 or S$3.45k /yr VS est S$10k/yr

    Protection age inifinity Vs Max age 99 (age100 lapse)

    Return There is a return Vs No return at all

    Trust Free if >US$2m Vs U need to pay


    I hv been quite curious for past 2 yrs why the rich & smart people are borrowing money to buy Universal life plan ( USD5 to 10 million). Why must be in USD ? Why not SGD as US dollars maybe depreciate in long run?. I need to come out one lump sum single premium for universal life plan is a huge amt. Why not just buy a term insurance which is cheaper where U pay yearly.

    I start to realise when I ask around & compare with my friends who bought term insurance. I find that by borrowing to finance my Universal life plan. I am actually paying less than a term insurance + many advantage for protetction as shown above.

    So if U will to buy univeral life plan. U must be able to borrow USD which is very low now to finanace the universal life plan. This is how the rich & smart people did it. I just follow what they do.


    rdgs,
    Vic

  24. #24
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    my principle of insurance is to make sure i dun burden my kids in future. leaving them something is a by-product (not the main goal). so i would prefer term, then invest the rest.

    STI ETF got 9% pa? over how many yrs? never knew ETF got dividends... must really do some homework
    There is no good or bad location. There is only good or bad price.

  25. #25
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    I quoted a paragraph from Tan Kin Lian's Blog:

    Universal life for high net worth people

    There is a similar trap for universal life that is being sold to high net worth people. They are asked to put in $1 million to be invested to get coverage of $5 million. The did not realize that their lump sum investment is locked into the low yielding policy for many years and can only withdraw it prematurely at a big penalty. An example can be found in my book on life insurance (case #16)

    Quote Originally Posted by cbsh38584
    Insured amt = US$1,000,000.
    Initial premiun = US$261,000
    Premium class = Preferred
    Rate on initial premium for 1st 7 yrs = 4%

    I will be borrowing against my portfolio to pay for my US$261k premium.
    Borrowing cost is est 1.06% now (US$2.7k or SGD$3.45k).


    Universal life plan Vs Term insurance
    -------------=---------------------------------------
    Sum insured US$1,000,000 Vs SGD$1,000,000

    Premium US$2.7 or S$3.45k /yr VS est S$10k/yr

    Protection age inifinity Vs Max age 99 (age100 lapse)

    Return There is a return Vs No return at all

    Trust Free if >US$2m Vs U need to pay


    I hv been quite curious for past 2 yrs why the rich & smart people are borrowing money to buy Universal life plan ( USD5 to 10 million). Why must be in USD ? Why not SGD as US dollars maybe depreciate in long run?. I need to come out one lump sum single premium for universal life plan is a huge amt. Why not just buy a term insurance which is cheaper where U pay yearly.

    I start to realise when I ask around & compare with my friends who bought term insurance. I find that by borrowing to finance my Universal life plan. I am actually paying less than a term insurance + many advantage for protetction as shown above.

    So if U will to buy univeral life plan. U must be able to borrow USD which is very low now to finanace the universal life plan. This is how the rich & smart people did it. I just follow what they do.


    rdgs,
    Vic

  26. #26
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    Different intentions when we buy insurance.

    Those who bought universal is assuming they are not going to die early.

    I bought term insurance is to boost my coverage with lowest premium as possible just in case if i die or something bad happen early

    Different stroke for different folks

  27. #27
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    Quote Originally Posted by samuelk
    How does STI ETF works?
    It's a fund that tracks the STI. But has lower management fees compared to those named funds sold by the fund houses.

    I doubt if its dividend is 9% as even the top dividend paying stocks in the STI do not pay much above 6%. The dividend is more likely to be around 3+%. These are the dividends from the component stocks.

  28. #28
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    STI ETF is essentially tracking the performance of ST Index which is made up of 30 component (mainly blue chips) stocks. Since the inception of this "stock" (you can buy it via your stock broker or online) on 11 Apr 2002, the annualised yield has been 9% (inclusive of dividends) or 5.79% (excludes dividends). So it is a much better investment than buying a universal or life insurance.

    It is advisable to just buy term insurance till 65 o 70 years old. No need to cover till year 99 or 100.

    Quote Originally Posted by Shanhz
    my principle of insurance is to make sure i dun burden my kids in future. leaving them something is a by-product (not the main goal). so i would prefer term, then invest the rest.

    STI ETF got 9% pa? over how many yrs? never knew ETF got dividends... must really do some homework

  29. #29
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    Quote Originally Posted by chiaberry
    It's a fund that tracks the STI. But has lower management fees compared to those named funds sold by the fund houses.

    I doubt if its dividend is 9% as even the top dividend paying stocks in the STI do not pay much above 6%. The dividend is more likely to be around 3+%.
    Dividend about 2+%. 9% includes cap gain

  30. #30
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    Quote Originally Posted by samuelk
    How does STI ETF works?
    Quote Originally Posted by Shanhz
    STI ETF got 9% pa? over how many yrs? never knew ETF got dividends... must really do some homework
    sti etf is a basket of blue chips.. singtel, dbs etc
    http://www.bloomberg.com/quote/STTF:SP

    the yield is < 3%
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

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