Insurance for ur child
- Thread starter MummyGrace
- Start date
got a few leh.. it actually depends on what you need..
1) 50% all rounded protection + 50% savings
2) 90% savings (Flexible yearly withdrawals but slightly lower interest) + 10% protection
3) 90% savings (No withdrawals allowed in midst but high interest) + 10% protection
something like that.. different family got diff needs mah..
3) 90% savings (No withdrawals allowed in midst but high interest) + 10% protection
This one seems good cause for protection I think hubby has already gotten something from Prudential.
Stormblessed
Member
Typically savings for retirement and savings for education plans will be separate plans.
Be careful of using insurance endowment plans for education, the yields are very low (< 4%). PM me if you need to discuss
Yup. I oso happened to be a mom-to-be from Prudential~
Give u this eg. $250/mth (min. $200)
Pay $250/mth x 12 months x 10 years = $30K paid
-On the 20th Yr, you will get approx $54K
-During these 20 Years, you'll be covered for a min. of $30K sum assured for protection + whatever interest earned.
-By then your gal = 21yrs old, just nice for college!
This is what most my mama clients like.. of cos we have 25 yrs plan.. but i feel its a bit too long for their education so never recommend..
Hmmm, i dunno what kinda insurance "Stormblessed" is talking about becos ours is approx 4.5 - 5.5% interest rate~
If you like, we oso have separate type of retirement plans, but from the way I see, your main priority now is your little gal, so I only quote accordingly. Don't worry lah, we definitely know the differences between savings for retirement and for education! lol~
4.5to 5.5% are usually stated as non-guaranteed returns in the contract. if i work out the effective interest rate, these plans (those offered by my agents) usually falls below 2.5%.
i won't take up such plans. i prefer to separate insurance from investment/savings. it is cheaper that way and i can get higher returns.
i won't take up such plans. i prefer to separate insurance from investment/savings. it is cheaper that way and i can get higher returns.
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cmeilim
Active Member
i read before that for protection, it's more cost-effective to buy term insurance than whole life insurance. bcos term insurance only gives protection, there is no maturity return value (ie no payout if nothing happens to the insured), but for this reason, its premiums are also lower than whole life insurance. the money saved from sinking into more expensive premiums for whole life insurance can be better invested for higher returns elsewhere. i also read that it is usually recommended for term insurance to be bought when one is earning an income with dependents. after one has stopped being economically active or our children have become financially independent, term insurance policies also provides the flexibility to be stopped as and when we want to, without any 'penalty' for early withdrawal that is characteristic of life insurance.
hubby and i feel that term and whole life insurance is not a priority for our kids at this point in time since we are not dependent on them.
agree with banner82 that parents should focus more on effective interest rate and also be aware of inflation. the projected returns given by agents are not only based on non-guaranteed rates, but are also usually based on gross interest rate and do not take into account inflation. hence the picture painted is usally a lot 'rosier' than reality.
hubby and i feel that term and whole life insurance is not a priority for our kids at this point in time since we are not dependent on them.
agree with banner82 that parents should focus more on effective interest rate and also be aware of inflation. the projected returns given by agents are not only based on non-guaranteed rates, but are also usually based on gross interest rate and do not take into account inflation. hence the picture painted is usally a lot 'rosier' than reality.
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that practically summarises my insurance objective.
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i do agree that term and life insurance are not for kids as you are not dependent on them. but there's some misregards to your idea of effective interest rate, i think you are referring to ppl who are more investment savvy.. ppl like brokers, who are good with their stocks and shares and investments..etc. for others who are not, how else are you going to grow your savings against inflation then? Though pictures definitely are painted, we have already done payouts to clients, it does stick to our benchmark quoted. and savings plans do not have penalty for early withdrawals unless u r referring to those (A companies) as you need to factor in the protection added.
Stormblessed
Member
Qian: I did a cashflow analysis for your plan. Effective return is only 3.83%.Pls see attached image which I did in excel.
Attachments
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Stormblessed
Member
Wah! 3.8%. Macham the rate you get for a 12 year singapore govt bonds held till maturity that is super low return. i might as well sink all my premiums with govt bonds and still get back my returns in 12 yrs time rather than wait for 20yrs. Guaranteed. That is, you have 30k now la.
On a more serious note, these saving plans are non guaranteed rate of return. It depends on the future economic climate. These projected returns (4.5-5.5%) would revised down. Even though past payouts to clients stick to projections but can anyone guarantees the rate would remains the same 20 yrs down the road?
Frankly speaking, i was disappointed when i was first presented with such plans. I thought these smart institution should at least produce a return of 5%. But then i guess its better than your regular savings interest.
Qian1984, we are not discrediting the merits of Prudential saving plans or any other saving plans for that matter. What we are trying to drive home here is to have a proper application of interest rate concepts when managing one's finances, be it investment, savings or loans. Simply looking at nominal interest rates can run into risk of missing your financial goals.
To mummies, If you are savvy, it is a plus pt, you can do comparisons of returns from different type of investments and risk profiles and sink your funds. If you are not savvy or do not hv a habit of savings, having a saving plan is better than no savings at all.
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cmeilim
Active Member
my hubby's reluctance to 'park' money with savings plans with insurance companies is also that there is no guarantee that these companies will be around in 20 years' time, given the volatility of the economy in recent times and how established, major financial institutions had suddenly gone under. governments can bail them out once, but twice? what then will happen to our hard-earned money with such a long maturity period? people just focus at the cash values generated, but forget to check it against the risk involved due to the long maturity period.
it's not about whether we are financially savvy or not, compared to the stock brokers, share investors etc. at the end of the day, it's our money, our savings, so we have to take responsibility for it, even if we may have financial planners or insurance agents to advise us. hence it is much better to try to learn something about financial planning ourselves so that we can assess for ourselves to some extent, rather than be misinformed or misguided. and it is through forums like this that we can share what we know or have learnt with one another. =)
it's not about whether we are financially savvy or not, compared to the stock brokers, share investors etc. at the end of the day, it's our money, our savings, so we have to take responsibility for it, even if we may have financial planners or insurance agents to advise us. hence it is much better to try to learn something about financial planning ourselves so that we can assess for ourselves to some extent, rather than be misinformed or misguided. and it is through forums like this that we can share what we know or have learnt with one another. =)
Stormblessed
Member
You don't have to worry about this in this case, Under MAS regulations, insurers are required to put in customer's premiums in separate funds that are 'firewall' from the insurer's balance sheets. Even if they go bankrupt or bought over, these funds are considered separate from the insurer's assets.
You can refer to: http://www.mas.gov.sg/legislation_guidelines/insurance/notices/Notice_101__Maintenance_Of_Insurance_Funds.html
I used to have a single premium plan with keppel insurance, and halfway thru the plan, it got bought by HSBC insurance. My plan still continued, and mature on time with stated guaranteed + non-guaranteed benefits that keppel had promised earlier.
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Stormblessed
Member
Emei, banner82, how come you ladies post at 4 and 5am? How come you're up so early?
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Wow, can PM me what kind of plan is that? I'm currently shopping for single premium plan (a.k.a endowment plan). want to park some money in low risk investment and just forget abt it and let it grow.
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cmeilim
Active Member
painful braxton hicks contractions, haha!
banner82: yup agreed.. that is only if we have 30K in our pockets for us to play with! if i hv, first thing i'd throw into blue chip stocks~ if i got more, i buy property 1st, sure earn one in singapore! wat our savings plans do is to help savings with little amount at a time, plus protection for yourelf or bb, and we are doing in comparison with the banks' rates! unless you hv lump sum to play, isn't a savings plan something for commoners like me to start a small savings in the most possible way i can? Inflation is going at a min. of 3% nowadays but banks only give 0.125%. if i just leave it in the banks, i'm losing $ at the end of the yr! if talk abt the most basic govt bonds, then i hv to part with lump sum of my emergency funds, and if u withdrawal halfway, same theory applies, sure gotta lose out something.. and precisely they are smart institutions, they gotta compensate for some of your "losses" by insurance coverage~ imagine i buy this plan and just die in the 2nd yr, i'm paid min. 30K+all the interest earned. but i only paid 6k for this. this is how they calculate loh, hv to be fair mah, cannot everything is give give give, then insurance cos go bankrupt liao. insurance just provide assurance as well as flexible savings at the same point of time..
stormblessed: ok u r right in this way of calculation, but don't forget the insurance added and also, the same amount of $ we put in will get depreciated along with the years as well..
cmeilim: not to be offensive here.. learning financial knowledge for yourselves is definitely good, but i oso want to knw a better way to "earn" more money in the shortest possible way if you have, do let me know~ of cos u r right that there is no guarantee whether the cos will be around, just like i'm not sure if i'll b around in the next 20 yrs, but if you are referring to how established cos suddenly gone under, dun worry, u r well protected by our govt! there are rules and regulations in MAS, your $ is separate entity in co's asset funds. until i striked toto or 4D got lump sum to play, i'm still just settled down with savings and unit trust plans first, investments are too hectic for me to keep monitoring..
anyway pardon me if i nv phrase it in a nice way cos i talk bluntly, mommy-to-be got headache + spotting after shopped too much overseas
, but still agree is a great discussion here for everybody to learn new knowledge here!