Insurance & Costs of having and raising a child

[NTL]

The premium is fixed at $176+ and payable till age 65. The payout is S$400 per month for maximum of 72 months if one is unable to perform 3 activities of daily living.

at $176 per mth, the total returns assuming 5% rate and a tenor of 25 years (40 to 65 yrs old) is $8820 (i.e. if one starts at 40, invests $176 per mth at 5% for 25 years, this is the sum of money at 65)

the total potential payout == 400*72= $28800 payable on failing to do 3 out of the 6 activities of washing, dressing, feeding, toileting, mobility and transferring.

payout ratio = 28800/8820 = 3.3 x

personally, if i treat this as a bet (since i do not want it to happen), a payout ratio of 3 times is too expensive - i will prefer a ratio of 15-20 times given this is just a bet.

Consider that my wife and I will not taking it up, it will be like we are self-insuring at 2/3 the payout.

[WolfT]

The premium is fixed at $176+ and payable till age 65. The payout is S$400 per month for maximum of 72 months if one is unable to perform 3 activities of daily living.

at $176 per mth, the total returns assuming 5% rate and a tenor of 25 years (40 to 65 yrs old) is $8820 (i.e. if one starts at 40, invests $176 per mth at 5% for 25 years, this is the sum of money at 65)

the total potential payout == 400*72= $28800 payable on failing to do 3 out of the 6 activities of washing, dressing, feeding, toileting, mobility and transferring.

payout ratio = 28800/8820 = 3.3 x

personally, if i treat this as a bet (since i do not want it to happen), a payout ratio of 3 times is too expensive - i will prefer a ratio of 15-20 times given this is just a bet.

The problem about eldershield is, it is very hard to claim unless it is very clear cut TPD.
Go read abt Tan kin lian blog abt eldershield claim.

[Temperament]

Someone told me or i read somewhere else, the very rich buy insurance not so much for their life but for the protection of their assets for the next generation. So if you are at least 2 to 3 million in assets person, do you buy critical illness insurance to protect your assets or you think you think it is better to self insured as your assets should be more than enough to cover the calamity. Touch wood they say.

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40 years old liao. I just received my Aviva ElderShield proposal last night. Its automatic inclusion by law once a person reaches 40 yrs of age unless one opt out from it.

The premium is fixed at $176+ and payable till age 65. The payout is S$400 per month for maximum of 72 months if one is unable to perform 3 activities of daily living.

Do you people think i should opt out? I think the payout is quite miserable. Taking inflation into account (assume 2.5%) by the time i am 65 or 75 years old, S$400 is like S$200+ in today's $. Not even enough to feed a maid who is hired to take care of me.

I will opt out when I reach 40. It's too little do be any form of "insurance". Eat also not enough, sleep also not enough. Furthermore, it only last for 6yrs. I think a term place with TPD which pay on similar disability will be a better choice. And I think it's cheaper too. Question is... Do I need it?

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Medishield or other shield are important. Those that I mentioned considering terminating refer to life and endowment policies. Maybe other buddies like yo share more views?plus I think cpf also have their eldershield plan.

If I not wrong, CPF "sub out" Eldershield to Aviva, Great Eastern and NTUC. So when reach 40, will be automatic allocate to one of the 3 insurers. Please correct me if I am wrong.

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Ha! Ha!
My wife & i refuse to buy any life insurance until my age of 40. At this age i have a son. Even then till now i still think life insurance is suck-eggs. So the joke is i have bought only $25K with a rider of 25K for myself and wife each. The rider portion has expired or lapsed. (NO body wants to sell or even mentions Term insurance lah! at that time).

The joke is i also has bought 25K life insurance for my son-entry age 0 because he has not reach 1 year old. Can you imagine entry age = ZERO; Date policy matured at 55 years. Now he is reaching 25.
Please don't laugh in front of me. It is alright if you laugh behind my back lah!
Ha! Ha!

Nothing to laugh about. If you have enough, why need insurance? This is one of the question which I will always ask.

Ha! Ha!
i think you missed the funny part. Who will buy life insurance for a baby at entry age = ZERO? May be someone with "special" intention?
Anyway, The insurance company limited me to buy only 25K. You see the company is always 4Ks one.

[WolfT]

i also buy term for my children at age 1. 300k with CI at 250sgd per year only.

[CityFarmer]

Someone told me or i read somewhere else, the very rich buy insurance not so much for their life but for the protection of their assets for the next generation. So if you are at least 2 to 3 million in assets person, do you buy critical illness insurance to protect your assets or you think you think it is better to self insured as your assets should be more than enough to cover the calamity. Touch wood they say.

I heard similar story. IIRC it is to protect against the estate duty. Since estate duty is abolished, it is no more a concern.

Please highlight if my understanding is incorrect.

[paullow]

just wondering how does buying critical illness insurance protect ur assets?
unless one has outstanding loans to pay n the amt of critical insurance is pegged to that. but then, mortgage insurance will cover that. correct me i m wrong.

and if one's fixed assets account for a only fraction of his net worth, i don't know life or tpd or critical insurance will help how much.

[Temperament]

i also buy term for my children at age 1. 300k with CI at 250sgd per year only.

Actually i buy LI for my baby so that it is kind of "forced saving" for me for him. Only $34/mth. Though i know i may get better return if i invest the money somewhere. Ha! Ha! you are better than me, you include CI too. To me i think it's "funny" because the insurance actuaries will be laughing behind our backs.
Cheers!

[NTL]

i also buy term for my children at age 1. 300k with CI at 250sgd per year only.

Actually i buy LI for my baby so that it is kind of "forced saving" for me for him. Only $34/mth. Though i know i may get better return if i invest the money somewhere. Ha! Ha! you are better than me, you include CI too. To me i think it's "funny" because the insurance actuaries will be laughing behind our backs.
Cheers!

Let me make it funnier for you. I bought $100k wholelife with CI for each of my kid from age zero. Thats my only gift to each of them. The rest they will have to wait will I meet my wife again somewhere else again. Whether this makes any financial sense, I don't wish to think about it anymore.

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just wondering how does buying critical illness insurance protect ur assets?
unless one has outstanding loans to pay n the amt of critical insurance is pegged to that. but then, mortgage insurance will cover that. correct me i m wrong.

and if one's fixed assets account for a only fraction of his net worth, i don't know life or tpd or critical insurance will help how much.

The only way I think is that he or she can use thr payout to pay for any medicaL or non medical bills related to the critical illness and don't have to touch the assets.

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Someone told me or i read somewhere else, the very rich buy insurance not so much for their life but for the protection of their assets for the next generation. So if you are at least 2 to 3 million in assets person, do you buy critical illness insurance to protect your assets or you think you think it is better to self insured as your assets should be more than enough to cover the calamity. Touch wood they say.

I heard similar story. IIRC it is to protect against the estate duty. Since estate duty is abolished, it is no more a concern.

Please highlight if my understanding is incorrect.

If look at the examples for Universal Life illustrations from various sources, they suppose to help to divide up the assets nicely between the beneficiaries. So that could be another reason too. But this not considered as insurance already.

[Temperament]

"Let me make it funnier for you. I bought $100k wholelife with CI for each of my kid from age zero. Thats my only gift to each of them. The rest they will have to wait will I meet my wife again somewhere else again. Whether this makes any financial sense, I don't wish to think about it anymore."

Ha! Ha!
i actually want to buy more than 25K LI for my baby. i think at least 50K. But the insurance agent at that time discouraged me to do so. i think she had told me her company might not approved or something like that. That was 25 years ago.
Now it seems no problem as far as the amount is concerned. Anyway money has become very "small".
To me i like to think all insurance products do not make financial sense (in term of returns) until you need to claim on the insurance. Especially LI & CI. Nobody in their natural lifetime likes to make a claim on them. It's paradoxical isn't it? You buy something that you hope you would never have to use it.
Shalom.
Amen.

[a74henry]

"Let me make it funnier for you. I bought $100k wholelife with CI for each of my kid from age zero. Thats my only gift to each of them. The rest they will have to wait will I meet my wife again somewhere else again. Whether this makes any financial sense, I don't wish to think about it anymore."

Ha! Ha!
i actually want to buy more than 25K LI for my baby. i think at least 50K. But the insurance agent at that time discouraged me to do so. i think she had told me her company might not approved or something like that. That was 25 years ago.
Now it seems no problem as far as the amount is concerned. Anyway money has become very "small".
To me i like to think all insurance products do not make financial sense (in term of returns) until you need to claim on the insurance. Especially LI & CI. Nobody in their natural lifetime likes to make a claim on them. It's paradoxical isn't it? You buy something that you hope you would never have to use it.
Shalom.
Amen.

I used to work for an insurance company and I have seen claims for baby death. Ultimately, insurance companies are careful so that people do not exchange their babies life for insurance payout.