Insurance & Costs of having and raising a child

[Temperament]

Among many insurance, Reducing Term Mortgage Insurance (RTMI) is relatively unknown and not many people talk about it.

I am a beneficiary of RTMI and would like to share my experience for your benefits too.

My first property was a private walk-up apartment.
I took up a S$355K loans and also purchase a Reducing Term Mortgage Insurance.
I paid single premium as it was not too expensive and I thought it will be cheaper to pay upfront vs paying for 25 years (the coverage is for 25 years).

Three years later, I sold my walk-up apartment and purchased a HDB resale flat.
Instead of buying HPS insurance, I just show the HDB officer my RTMI (which still has 22 years balance)

Three years later, I brought a condo and again the same RTMI provides some partial coverage (and full coverage after I sold off my HDB flat).

Everyone is aware of buying term and invest the rest.
Now, you are aware that other than your life Term insurance, there is also an alternatives Reducing Term insurance for your housing loan.

Give it a thought....
(Please do not ask me why Insurance agent never push this product... your guess is as good as mine.)



Love Compassion

Yes, in my case as i bought my life insurance at the age of 40, the insurance agent asked me to buy A RTI on my life insurance, such that i am always covered for 100K instead of only 50k if no Reducing Term Insurance. on my life insurance. i think the RTI on my life is for only 15 years. i stop paying the premium some time ago.

[chialc]

anyone has access to quotation tools?

Is there any difference in premium for Mortgage Reducing term vs Life Reducing term?

If there is a difference, which one is better in term of value (aka not just price alone).

What about the joint coverage? How does it affects the premium?
Is there any benefits?

Love Compassion

[NTL]

If I not wrong, mortgage reducing term takes into effect of interest, while life reducing is linear reducing, over the period of insurance.

Not sure about joint life's premium. What I know is for joint life, there are i) pay on 1st death; ii) pay on last death. For mortgage, it should be 1st death basis.

[chialc]

Not sure about joint life.

NTL, Thanks for clarifying. I learn something.

Being a fellow Value Buddies, it's my habit to get the best deal.

Hopefully someone with the quotation tools can generate a premium for sharing:
assume couples both age 35 years

a) 800K Mortgage Term Reducing Insurance for 20 years
b) 800K Life Term Reducing Insurance for 20 years
c) 800K Mortgage Term Reducing Insurance for 20 years Joint Policy

Love

[NTL]

Just using my available knowledge, I believe that (a) will be more expensive than (b), due the the amount of cover over the years. When interest for (a) is reduce to zero, then it will be the same as (b).

As the Home CFO, I am also seeking to find the best deal for my family.

[chialc]

Understand NTL.

Let's see any one with the insurance quotation tools can generate some numbers for us.

天天快乐

[NTL]

Hi chialc,

I managed to dig out an old email on an enquiry I made in 2009 for mortgage insurance. So the numbers will not be what you asking, but can use as a comparison. Quote was from Aviva.

Insured amount: $500,000
Years of Cover: 35
Interest Rate: 5%

Yearly Premium: $810 (self)/ $415 (wife)/$1,180(joint)
Single Premium: $26,700 (self)/ $13,700 (wife)/$39,000(joint)

Hope it may help you somehow.

[chialc]

Thank you very much!

The premium seems very high. Does not look appealing to me.

[NTL]

With a much shorter term of 20yrs compare to my quote of 35yrs, you should be able to get a better pricing. Go and try asking!

[luminaire27]

Have been an avid reader of VB since I discovered it earlier this year, and have to thank all the seniors here for their valuable advice, really opened my eyes to the world of personal finance and value investing.

Lately after reading all these, especially this thread which I've read thru twice by now, decided to take a hard look at my insurance policies. Right now, I have the following coverage, hoping to hear fellow forummers' opinion and advice. Btw, more about my current circumstances, I'm single, 30, non-smoker, and my parents don't need to rely on me for their living expenses.

Policies as follows:
1. NTUC DPS: S$36/annum; Coverage (Death, TPD): 46k;
2. Aviva Group Term: S$192/annum; Coverage (Death, TPD): 125k;
3. AIA (25Y Term): S$452/annum; Coverage: Death, TPD (15k);
4. AIA (Personal Accident): S$155/annum; Coverage: TPD: 25000 lump sum, 1,500 from year 1-4, 9,000 on year 5; Partial Disability: % of 25,000; Medical reimbursement: up to 2,500/injury, 5,000/overseas; Income replacement: 12,500;
5. AIA (Pink of Health): S$150/annum; Coverage: Hosp. benefit: 50/day, up to 500days (100/day extra if due to accidents); ICU benefit: 150/day up to 30 days; Get well benefit: S$50; Hospital expense reimbursement: 1500/accident or illness;
6. HSBC 30CI (ILP): Coverage: TPD: 100k; CI: 150k; Death: 150k;
7. Aviva (H&S) MyShield Plan1: S$383/annum;
8. GE 25Y Annual Cashback Endowment: S$1205/annum, annual cashback at 5% from year 2 onwards to year 9, from year 10 onwards at 6%;
9. HSBC Growth Manager (ILP): S$2400/annum (7Y lock-in)

First off, I think I really have bought quite a load of crap here, so feel free to scrutinize and offer some advice and opinions.
My thinking is that for Death, TPD, I'm sufficiently covered for someone my age and with no dependents.

For everything else, it seems I've got the wrong policies or insufficient coverage.
CI: Looks like I could get a term CI costing much less than what I"m paying?
H&S: Already looking to upgrade to the maximum I can afford, ie. MyShield Plus Option C Plan 1 (additional S$384/annum cash premium);
DI: zero coverage at the moment;

Additionally, for CI coverage, I've spoken to an agent who mentioned that it is important to get some coverage for early stage CI (mainly things like Stage 1 or 2 cancers), esp. if one goes for regular medical checkups and discover those things in time, otherwise the normal CI policies only cover terminal stages cancer. Appreciate if fellow forummers can share their opinions on coverage for early stage CIs, especially since things like cancers are just getting commonplace in our society today.

For the endowment, it has already in its 10th year already, projected maturity at this stage is 20k (currently all cashback coupons are NOT reinvested). Am considering the option to leave it as it is and just use the annual coupons for passive investing in index funds (Nikko AM STI ETF for now since I'm still quite noobish now);

As for the HSBC Growth Manager plan, i've taken a look at the latest statements and my total balance for all units held is less than the total premiums paid (3 x 2400 = 7.2k) so far. This policy is geared to maximum investment and minimal coverage (6.8k Death). The costs for this plan are just crazy, $130 for $2.4k premiums received in my third year, a good 5% shaved. I'm considering terminating this plan and use the money to do my own investments, though that'll set me back (in terms of premiums paid) by a good 5.3k.

All these have been bought in good faith from friends who were agents, sigh... but at least I'm glad I've found VB and can start to re-organize my policies and learn more about value investing. So, sorry for my long winded first post here, but appreciate if fellow forummers can offer some advice on how to improve my current coverage. Thanks!!