Insurance - Human Asset and Liability
For whom is the whole life insurance meant for?
LP's ideas as follows:
"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."
We know that insurance is used as hedge for protection against human asset and future liabilities but not sure it is financially wise and cost effective to use insurance as a hedge to protect and enforce saving.
Let do the maths for my Whole Life Endowment Policy, the cost of the annual insurance premium payable is as follows:
1) 6.1% of Sum Assured
2) 5.0 % of Sum Assured + accrued bonus
Do you think it is cost effective to use it just to hedge against enforced saving when there is no more dependency needs?
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There are no absolute right or wrong. all depends on
ReplyDelete1. needs
2. education level
3. agent's understanding/information of the client
4. agent's honesty.
http://retirefinancially.blogspot.com
Just to add on...
ReplyDeleteWhen you have no more dependants and a whole life policy on hand, options are:
1. Analyst it. Cash it and invest the money somewhere that give better returns, if worth doing so.
2. Else, just leave it. Assume you don't need cash.
3. Cash it to cover living cost regardless the ROI.
So, again, no right or wrong, just level of knowledge and education.