(31-12-2010, 03:12 AM)Poowawa Wrote: (28-12-2010, 11:13 AM)d.o.g. Wrote: Disclaimer: I am not an "expert" in insurance. At best I am an informed consumer.
My $0.02:
You have zero dependents i.e. financially nobody is worse off if you die. Therefore from the purely economic standpoint there is no need to buy any insurance on your life, whether term or whole life.
Since you have 3 whole life and 2 endowment policies you in fact have most of the money going into investments and very little going into actual insurance coverage.
Think about WHY you have the policies. If you want life insurance (even though it appears that you don't need it), buy term. If you want investment, invest by yourself into index funds or stocks. Right now your insurance policies are the worst of both worlds: low coverage and low returns.
Hi d.o.g, thanks for your comments. I wanted the policies mainly because I wanted protection in case I fall really sick and incur hefty hospitalization bills thereafter becoming a burden to the people around me. My mentality is if I go so be it as I don't have dependents but if I continue to incur medical bills, then I become a liability. Other than buying insurance with critical illness riders, there does not seem to be any way of ensuring that my needs are met.
Or are there other alternatives I am not aware of?
It is always better to do insurance by ourselves than buy from insurance companies. What I mean is that if one has a lot of extra disposable money at hand that we have no need to touch (e.g. $300k and above), we should keep it with us in an investment that is liquid which means we can withdraw the money easily anytime.
Why not insure with insurance companies? A lot of different policies are overcharged, with the insurance agent and insurance companies drawing sales charges, commissions and annual charges. So, part of our premiums go into pockets of these people and companies since we are buying their products and services. Sometimes, if we are not careful, the charges and commissions we pay can actually be quite high in some cases (e.g. whole life policies and ILPs).
So, if one knows how to do investment himself (must be a knowledeable investor), he should use his own money to do own investment which can grow his money at a higher rate than what insurance companies provide. If the investment is liquid, he can withdraw out part of his money from his investment anytime if he needs it for medical needs and so on.
The way insurance works is for people who do not currently have large amount of disposable cash at hand for sudden large medical payments or to leave to dependents when they buy insurance, so they need insurance coverage (e.g. $300k life insurance with critical illness rider) to cover sudden medical payments or to leave a sum of money to their dependents for a period of time while they still work and build up their assets over the same time. For these people, they have no choice but to buy insurance.
Another way to prevent the insurance companies and agents from absorbing too much sales charges, commissions and annual charges from us is to go for term insurance instead of whole life insurance. It is much cheaper to get oneself insured with the same coverage amount. If one is prudent with finances, by the time he retires, he should have a large sum of money invested in cashflow generating assets that is giving him good sustainable cashflows, so he may not need whole life insurance coverage. A term policy may already be enough for people who can build up their cashflow generating assets for life retirement needs (pay for own daily needs and also offers potential to be liquidated to answer larger medical payment needs if required).
I myself have bought insurance already because I do not belong to the rich folk catergory with much disposable money that I can do own investment and insure my ownself. I personally dislike what insurance companies are charging for the policies they sell.
So, if one has much disposable money (e.g. $300k and above) and is a knowledgeable investor, he should invest his own money to get higher returns than what insurance companies are giving on one's premiums paid. Since the idea of insurance is to provide a sum of money to pay for sudden bills such as medical payments or to leave money to one's dependents, one can consider doing own investment into acquiring cashflow generating assets which are liquid (can be liquidated easily when money is needed for personal immediate use) to grow one's disposable money which will be better than leaving one's money to insurance companies which take a chunk of one's money in terms of sales charges, commissions and annual charges.
We need to think differently from what we are always conditioned to think. What is popularly done by the masses may not always be what is wise.
A word of caution that I am not an insurance expert nor finance expert, just offering a different perspective to look at the way we do insurance......
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