(10-12-2010, 11:56 AM)Musicwhiz Wrote: Thanks d.o.g., no offense taken.
I am reviewing my policies now (I have a summarized sheet) and realized that I had purchased quite a few whole life policies (some when I was young, and some in early 2000s), so I guess I made some bad mistakes there. I'd probably liquidate most of them and buy additional term to cover myself; then invest the money saved. Good idea when I started to think about it - I should have done this long ago haha.
As for my daughter's policy, it would seem that I should terminate the Whole Life policy to save myself money moving forward in 2011, and use the money saved to further increase my term coverage (for me and wife). Will have to speak to my planner about this. I guess although I already spent some $$ on my daughter's whole life policy, it's better to terminate now rather than suffer more years of paying when the returns are poor, and I can use term instead.
Once again, thanks!
Just to provide an update on my insurance revamp and review after the discussion on December 10, 2010. It's been about 4 months since then and the date today as I type this is April 15, 2011.
Thanks to d.o.g's advice I took a long hard look at all my policies. I've surrendered three policies of my own - 2 Whole Life and 1 Step-Up Term; and signed on three new policies - a CI/TPD Term till Age 85, a 30-year reducing Term and a Disability Income Policy covering $3,000 a month. I am still keeping one Life Policy as it is cheap and offers death, TPD and CI coverage; and also one older endowment policy which so far has yielded 4.75% per annum compounded returns (I did the computation with my financial broker with the help of a financial calculator).
As a result, my yearly premiums has dropped from about $4,450 to $4,380. Doesn't sound like much, but my coverage for death/disability has increased from $380,000 to about $750,000; and for CI the coverage has increased from $75,000 to about $150,000. In addition, I also now have coverage for income loss should that occur.
From this exercise, I managed to "free up" about $9,000 of cash from the surrender of the two Life policies, and have put this money to work earning 5-6% yield in equities.
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As for my wife, she will be surrendering her Whole Life policy later this month, and free up about $6,000 worth of cash (to be used for investment, no doubt). Her current term policy is step-up and covers $250,000 death/disability and she will give this up too. Premiums currently stand at about $3,000 per annum.
I have already signed her up for two new Term policies for death/disability and CI. Her coverage is now $720,000 for death/disability and $125,000 for CI, while her premiums have been reduced to just
$2,000 per annum! I did not get disability income insurance for her as I perceive she may convert from full-time work to being a stay-home mum pretty soon; and anyway she earns less than me so the policy will also pay out less.
Somehow the costs for disability income policies are much higher for women than for men!
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The plan is also to terminate my daughter's Whole Life policy and change it to a Term one, either with same expense/higher coverage or lower expense/similar coverage. This policy currently runs till about Nov/Dec so I am just waiting for that time to come for the surrender. Will invest any difference I obtain; and currently I am already investing my daughter's money on her behalf in order to build up her University Education Fund.
Incidentally, my current Endowment Policy (the one yielding 4.75% compounded) will mature around the time she is 18, so this is yet another source of funds to fund her education if need be.
So through all this, I have to once again thank d.o.g. for "forcing" me to review me and my wife's insurance policies and to surrender the Whole Life ones. Will proceed to "Buy Term and Invest the Rest" from now on as I feel comfortable in getting a 5% return on my investments over the long-term.
Will appreciate some comments and feedback on this as well, and for others to share what they have done with their own insurance policies.
Cheers!