If you are an expecting mother, THIS is the right plan for you! It  offers protection for you against possible Pregnancy Complications as well as death, terminal illness and disability before childbirth. And if you are also concerned about your newborn, PRUfirst gift also covers against selected Congenital illness as well as death. disabiility and terminal illness as well as offers Hospital Care benefits to the newborn =)

Basically Prufirst gift protects your child even while he or she is still in the womb. It also helps you give your child a real head start in life even before he or she is born and plan for his or her future needs.

PRUfirst gift cares for your bundle of joy through two plans that provide seamless protection for both mother and baby =)

If you feel that this plan is exactly what you are looking for, do contact me for further discussion or if you think that any of your friends who may benefits from this plan, do drop me an email!

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It had been some times since i last blogged. Recently i have been busy with both work and personal stuff but it has been very fufilling. Hence today decided to spend my rest day to stay home to write on my views towards certain financial planning matters.

First of all, i like to touch abit on saving plan. Many people that i spoke to have agreed that saving is good but the only problem is that there are so many saving plans out there for them to choose. So the question is whice one is suitable for them? Therefore this is what i am going to address over here.

Generally there are two types of regular saving plans with guaranteed return (endowment): one belongs to the type where u need to pay for the whole of the term period (Eg: 20 or 25 yr) while the other type is the limited payment period. For the latter, it is designed in such a way where by you pay for a certain short period (eg: 15yr) and you be only getting back your money in another 5 or 10years time. 

Which is good and who should buy these type of plans? In a nutshell, i would highly recommend that savers go for the limited payment period whereby spender should start off with the normal regular saving where he/she needs to pay for the whole period. The reason behind is that such plans normally allows cashback flexibility, which means that they can allow to withdraw partially of their money, from 2/3 yr onwards. Normally for people who does not have a saving habits or fearful of uncertaintly, such benefits would appeal to them more. In fact, it is more suitable for them. However do take note that generally this type of saving plan does not comes with high interest.

Here is an illustration: Male. non-smoker, anb 28, occupation: Bank officer, decides to save $250 per month. So what plans will provide him the most money?

Supposed the guy takes the regular saving plan of 25 years. He will need to pay till age 53 years old and the total premium layout is about $74k. So guess how much is the total returns if he chooses to accumulate the cash back? If he opts for this option, the toal amount that he be getting  back will be $$110k. So this is the scenario where he does not take out any money along the way. However what if he needs money to use? Every year from the 2nd yr onwards, he be entitled $1825/yr to withdraw for personal usage. Let’s assume he needs the money every year till the maturity of the plan, he would have withdrawn $43,800 in total and left with $49k upon maturity.

Let’s move on if the guy decided to go for the limited pay saving plan. With the same amount being saved, he will be saving about $44k in 15 years and be getting back $95k in another 10 years time. Do take note that after 15 years, this guy is not required to pay any more premium and he only needs to wait for the plan to mature in order to reap the benefits. Of course if along the 15 years, the person really needs money, he has to either do a policy loan of 6% or surrender the whole policy. There will not be any cash back for this person to withdraw.

So what is your view on these two plans? Am i right to say that unless you are quite confident to be able to save this amount without touching it, the regular saving plan would seem to be a more feasible choice for you? =) Again i like to emphasize that in the long term, a limited pay saving plan would seem to be a better option for consumers. But sadly agents normally don’t promote it due to the reduced in commission. What is good for consumer is usually not good for agents! This is a well-known fact!

Therefore please do not blindly buy plans from roadshows as these people are just all out to get rich. There are still a minority of good agent at road show =)

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One of the special features of endowment plan is that the policy itself will still continue to accumulate desired amount of money should one of the parents meet with misfortune. For adult, the premium of the plan will be automatically be waived off if they contacted any major illness.

There are various types of saving plans available in the market and customers should look into different types first before committing into it since it is a long term commitment. Always ask your adviser for the type of endowment/saving plan he/she has and look into the features and return of the policy. Typically such plans are divided into the following: Limited paying term, saving with flexibility or saving without flexibility. Choosing what plans really have to depend on your current situation and most importantly what is beneficial for you in long term.

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Typically you can adjust the allocation of funds of your investments for unlimited number of times with no charge. You can choose to increase/decrease the amount of sum assured depending on your needs and even can do a single sum top up (min. $2,000) if you want.

One disadvantage of ILP is that there are many charges involved which can be too much for those people who know how to invest themselves. Types of charges involved are: policy admin fee ($50), spread fee (3%), annual management fee and mortality rates. Normally the investment portion of such policy works differently for different company hence it is important that your adviser must inform you about it. Utilize the regular premium option as it will yield you more money due to dollar cost averaging.

ILP offers a good protection policy because of its ability to add in all sorts of riders into it and the premium is relatively cheaper in premium when compared to whole life policy.  Though the mortality charges can be quite high due to old age but there is a feature whereby it allows the customer to adjust sum assured downwards if necessary. Client can compliment this plan by getting a whole life limited pay insurance to make sure that even when the sum assured for ILP is reduced to zero, they will still be covered!

Therefore if you are someone who is looking for a product that can help you to invest and at the same time getting insured, ILP is one of the suitable plans.

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Disadvantages of term life insurance include the fact that premiums increase at the end of each renewable term because as you get older the chances of your death increase. Consequently, term life insurance may become too expensive in later years. One more thing is that term insurance does not provide any cash value hence the concept of term insurance can be like a car park coupon.

Other way to get a term insurance is to buy those that have a fixed rate throughout 75yrs old.
Situations where term life insurance may be the best option include:

1. You just want life insurance protection but at a lower premium than whole life plans.
2. You have other assets and investments for retirement and do not plan to use life    insurance to cover that need.
3. You are not planning to stay in Singapore for long and like to have a short term coverage
4. You would like to increase your protection amount during the next phrase of your life stage.

What can a term policy covers?

- Death
- Total and Permanent Disability
- Major Illness
- Accident
- Disability Income

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Insurance companies help take the financial sting out of a loss of life by collecting money from the subscribers to the program, investing the amount, and distributing a sum of money back to the subscriber or to the subscriber’s estate after death.

Financially, most people can justify the cost of having some life insurance. Life insurance is one means of adding to or building an estate. Life insurance also acts as a protection against loss of the insured’s income or assets.

What Is The Purpose Of Life Insurance?

Life insurance is protection for dependants. Your dependants can include children, parents, spouse, or anyone who is dependant on you for financial support. In a sense, creditors are also “dependants” in that they are depending on you to repay your debt. So creditors can be added to your list of dependants. Your duty is to ensure that life still goes on well even without you.

Life insurance is not an investment nor is it a savings plan. The American Council of Life Insurance (ACLI), a trade association in the life insurance industry, said in an issue of their newsletter:

Life insurance is not designed to provide for the possibility of economic gain in return for a risked sum of money. That’s an investment. Nor is it designed to accumulate deposits of money building toward an individual or family financial goal. That’s a savings account. The purpose of life insurance is “to provide a guaranteed death benefit to protect your dependants against financial loss.”

Who Needs Life Insurance?

Someone may tell you that everyone needs life insurance. According to another ACLI publication:

Anyone needs life insurance if his or her premature death would result in financial loss to others or deprive them of a financial gain.

In other words, the need for life insurance depends on a person’s situation and most of the times, it applies to everyone of us.

Do you want to leave behind a huge amount of debts for your loved one after your death or you prefer to make sure that they can live life comfortably even after you are gone.

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