My struggle with insurance policies

My first insurance policy was actually an accident policy purchased during National Service with an agent (known as Mr A-see my previous post) from NTUC Income. Interesting thing about this accident policy was that it has a savings element to it which if you think hard, does not make any sense at all. Insurance is protection. Savings is just pure savings. The two does not mix together. 8 years later, I terminated this policy which requires monthly premium of S$32.50 as it just make me look extremely silly.

Another insurance policy that Mr A advocated was to buy life coverage for death and permanent disabilities. He made lots of commission from me selling me coverage for S$100K. Even more ridiculous was pushing me to sign up another S$50K a year later. For death and permanent coverage, one does not need it forever. You only need it while accumulating wealth and to cover for any unforeseen events to ensure your loved ones can survive financially. As such at most 25-30 years term policy should suffice. Beware of insurance agents or financial advisors who try to sell a life coverage. The commission from life insurance sales is a lot more than term insurance and there goes their independence. If possible, try to get insurance planning from financial advisory firms that charges fixed fees. (Note: When I realised I was being misled by Mr A, I terminated the life coverages and incurred S$1.5K of losses...just no point to continue when the money saved from buying term policy can generate a far better return to the savings components of life plans.)

The only life policy that I ever purchased was for critical illness. Currently, I am holding  on to 3 critical illness policy from (i) NTUC Income; (ii) Aviva and (iii) TM Asialife. I like the NTUC Income Living Policy series as it does generate good cash value with the double bonus given out on every 5th anniversary of the Cooperative. However, this is a traditional whole life policy that one is required to pay until age 85 years old. In year 2006,I wrote in to the then CEO, Tan Kin Lian on my suggestion for a limited payment plan which other insurance companies are offering but was told "there were reasons" why they only have traditional wholelife payment plans but will look into it.

 I loved Aviva and TM Asialife as these companies offer limited payment critical illness coverage. I just can't envision myself paying for insurance when I am already retired. Since then, NTUC Income has came out with it's own version of limited wholelife plans to remain competitive. TM Asialife is the only insurance company in Singapore that has this awesome record of never ever cutting their yearly bonus.

Disability income is another crucial piece of protection that everyone should have in his or her arsenal. This type of unique insurance offers you protection against short and long-term disability caused either by accidents or illnesses by providing you with a replacement income that continues to support you and your loved ones during disability. The flexible coverage is guaranteed renewable and continues until your chosen age of retirement (55, 60, or 65 years). In the Singapore market, seems that only 2 insurance companies dare to offer this coverage, namely, Aviva (IdealIncome) and Great Eastern (Pay Secure). Manualife also offers something similar in lump sum payout in the event one is not being able to work but there is a distinct tightening in definition of the events that triggers the different tranches of payout....so be careful when shopping around for such coverage.

Last but not least, hospitalisation and surgical plans for healthcare. If possible, everyone should opt for the best graded plan that covers private hospitalization. In the event that one is sick, one should be looking for the best medical treatment available and not worry about whether such treatment covered under the current plans.