Short answer, NO, insurance is not for savings, nor it is for investment.

Long answer, click on below link.
( Insurance 101 )

As what I've read, you mentioned that insurance savings plan can achieve higher return as compared to FD but according to roystevenung, insurance is not meant for savings nor investment. May I know why?

I've read your blog before and I am also aware that insurance charges will increase as we grow older but the question is the savings plan is not really meant for savings? It's only purely for protection? Are you saying that when we purchase an insurance product, we are expecting something bad will happen to us, e.g. critical illnesses and TPD, so that we dont have to pay the monthly installment anymore?

Do ask this question in the Finance and investment forum for an unbias, and most of the time accurate view. Well, you may ask WongMunKeong on his thoughts on insurance as investment or savings

Everybody has their own definitions of what insurance is and how it can help someone. Savings plan is not purely for protection, its not even a comprehensive protection plan because of the fixed term and not whole life therefore render it unsuitable for protection alone.

You purchase an insurance product for risk management in the event that something untoward happens to you in the future, you will not be financially threatened.

Please check your PM

Investment-linked plan is different from savings plan (endowment).

For an investment-linked plan, you can customize your own investment portfolio according to your risk appetite. You may switch between different types of funds with different risk level to optimize your investment return from time to time, just like a unit trust do. At AIA, currently there's no charge for the switching process no matter how many times you do switching on each policy year. However, cash value for this type of policy is projected and is not guaranteed. The actual cash value is depends on your investment return from time to time so may be vary than the figure shown to you in the quotation, especially when you choose to have a high risk investment.

For endowment plan, you are participating in company's investment so normally the return shall fall within the range shown to you in the quotation.

Does endowment plans generate higher return than FD? Do remember the endowment plans in the market is not the same with FD, there's insurance element that comes with the plan and there's no free lunch in this world. So when you consider endowment plan as a savings plan with free insurance, then the return may be lower than FD.

Does investment-linked suitable to be savings or investment? It depends on your risk appetize and your desired target of return. There no right or wrong answer I think.

Bro - imho, best to use insurance for coverage and invest the difference (ie. ILP what not), unless one is totally deficient in common sense and simple maths.

Reason:
In the real world, hitting 5%pa to 6%pa is quite do-able with a mixed approach of asset allocation in FD, Bond funds, stocks or equity funds, REITs or properties or REIT funds. The long term average should be around 7%pa to 8%pa if done systematically for a common person.
Do those ILPs promise at least 5%pa? hell, 3%pa to 4%pa?
No? Promise as in written guarantee in the policy wor.
No right? Ada ka?
Why not? Shock - horrors... may be so that they can wriggle their way out of it neh

FYI - my AIA insurance, from 1991/1992 to 2005/2006
Can't even hit 6%pa and this was during the time when FD was 10%pa+/- AND with the KLSE on a golden bull run (buy anything and it flies)
Why?
When i called AIA & asked whether i still needed to pay monthly coz way past "critical year" liao, they said yes - gotta keep paying
When i asked how much longer before auto-self funded? They said about 5 years.
When i asked whether this is FOR SURE? They said no.
Alo - based on my calculations, they didnt even hit 4%pa on average long term returns + i bought the donkey thing when i was 19/20 years old.

Final opinion to share using "cars" to relate:
When U want a reliable & safe car, U go & buy a reliable & safe car like say Volvo right?
Do U expect it to perform like a Ferarri (speed like mad & handles like whoa..) and a Pajero (off road & mountain climbing) and be fuel efficient like a Kanchill?
If U buy a car that has all 4 vehicles' features - how much U think it'll cost? AND how U think it'll perform its main criteria of being a reliable & safe car VS a Volvo?

Just a thought

This post has been edited by wongmunkeong: Aug 23 2013, 05:16 PM

Am wondering,

Is there any insurance packages that covers for loss of employment too ?

No, sorry.

a person above age of how many are not allow to purchase saving plan insurance?? (AIA)

Please see mr wongmunkeong replies.

the entry age for saving plan is from 14days to 60 years old

then, if i recall there is a plan from Great Eastern that yield good return.. It's called Great Wealth Accumulator..Is it really as good as it says?

Its a new endowment plan from Great Eastern, if you want to get a savings/retirement plan but you have less budget for savings then you can think of getting this plan.

oic..okay..thx for da info..

I am looking for whole life insurance or standalone lady plan
only interested on protection


can anyone suggest good plan for me?
so far i only know prulady standalone plan from prudential

im 27yo aircraft maintenance engineer in the airforce (govt servant), my wife 24 yo housewife, my kid 13 months old. all non smoker.

appreciate if someone can quote me life policy for my wife and i, and edu policy for my kid. if possible, i want something that can complement my existing healthcare benefits as a govt officer with 1st class R&B at govt hospitals.

budget 600 monthly for the three of us, minimum savings and investment cos i already have saver scheme at >10% yearly, maximum medical and PA. pls also advise how to maximize tax relief for life insurance and kids education relief? ptptn via sspn-i offers kids saver tax relief up to 6k yearly, will consider to put in extra if i claim that from the kid's plan?

reach me at edwardlcy@gmail.com ...thanks.

You got a medical card for yourself already as you said, but how about your wife and newborn child?

You don't need a saver scheme, just a good plan with critical illness protection to complement your existing healthcare benefits will do.

Tax relief for life insurance plus EPF contribution will max out at RM6k per year. For medical plus child education plan, the max is at RM3k per year.

Yes.
Latest plan to over come other plan.

For Endowment Plan,
Always ask if you want to withdrawn yearly bonus, and add up every single sens.
Then you will know the plan is good for you or not.

Example,

Overall you had paid RM30,000.00

Receive
Year 1 bonus - RM500
Year 2 bonus - RM550
Year 3 bonus - RM900
Year N BONUS - RMXXXX.00
Total .... RMXXXX.00

Sounds interesting.

After 3 years Rm900? How much is the monthly premium, and pay how long? Get back how much?

How come pay is 30, 000 but only get back Rm9999.99? Your example Year N only got 4 "X"?

You need to take a look at the full quotation for a definite answer. Don't rely on incomplete illustrations. PM me your details for a more complete answer