Dreamer,

- A Nobel Prize winner scientist maybe only have a networth of 2 million. But are you sure his life only worth 2 Million?
- A bread winner maybe has a networth of 50k, after minus his various loans, but he has a wife who have no financial income, and 3 young children. So his life only worth 50k?
- A young child of a Dato' got kidnapped, the kidnappers demand a ransom of 1 million. Is the child's life worth that much? His networth maybe just few k in the bank.
- Who taught you your life worth = your networth? I would really like to know.

GE, Supreme Livin' Care Plus. Traditional 3D Participating Policy.
Age 30, Male, Non smoking. Class 1 occupation.
Basic sum assured: 100,000. 3430 p.a.
BSA: 200,000. 6860 p.a.
BSA: 300,000. 10,140 p.a.
BSA: 400,000. 13,520 p.a.
BSA: 500,000. 16,900 p.a.
In your example, 13520/6860 = 1.97!! It is even less than 2!!!
Tell me does it increases exponentially?

Stop BS Dreamer, you maybe older and more experienced than most of us here. It doesn't make you an expert in financial planning matters. And in this case, about insurance.

P.S.: Why does someone who is not an Insurance Agent trying to teach insurance agent about their own products? They should just shut up.

What bro dreamer said has a point there . . . asset - liability = the networth ( thats the most common term most ppl use to calculate their networth )
of course a lot other factors need to take into consideration as well . . . . .


This post has been edited by Colaboy: May 4 2009, 03:27 AM

bbjslee,

1) I am talking about NET WORTH. And, what has a person's life worth got to do with LIFE INSURANCE?? It is IRRELEVANT. It is ONLY relevant to INSURANCE AGENT so that they can over-sell the customer. So that, a customer will buy TOO MUCH life insurance.

The MOST that a person should buy is 10 years worth of income. 10 years worth of expense may make sense. If YOU buy too much life insurance, you expense level went up, you need MORE LIFE INSURANCE. This makes INSURANCE AGENT even happier. More to sell.

<< A bread winner maybe has a networth of 50k, after minus his various loans, but he has a wife who have no financial income, and 3 young children. So his life only worth 50k?>>

WRONG QUESTIONS!!

2) Who care what his life worth?? The CORRECT question is what is his income?? If he is NOT surviving on current income to begin with, buying life insurance is not what he should be doing to begin with.

3) If his 50K does not cover 6 months of expenses, he should not be buying lfe insurance.

<<- Who taught you your life worth = your networth? I would really like to know.>>

4) I do not use BS like life worth. I use REAL NET WORTH. You choose not to listen.


<< GE, Supreme Livin' Care Plus. Traditional 3D Participating Policy.
Age 30, Male, Non smoking. Class 1 occupation.
Basic sum assured: 100,000. 3430 p.a.
BSA: 200,000. 6860 p.a.
BSA: 300,000. 10,140 p.a.
BSA: 400,000. 13,520 p.a.
BSA: 500,000. 16,900 p.a.
In your example, 13520/6860 = 1.97!! It is even less than 2!!!
Tell me does it increases exponentially?
>>

5) I told you that my CIRCUMSTANCES and my QUOTATIONS which has NOTHING to do with your 3D BS.

6) Now, isn't it better for a CUSTOMER to see a table like this and let them decides?? So, they can shop and budget for the RIGHT coverage??


The COVERAGE should be based on NEED. And, a person SHOULD KNOW what each coverage cost and trade off. 10 years is the maximum amount. Life worth is IRRELEVANT. If you use life worth, you will be BUYING TOO MUCH coverage.

<<BSA: 500,000. 16,900 p.a.>>

Let's take this as an example, to buy 500K coverage, a person should have at least 50K worth of gross annual income based on 10 years rule. Now, if you are making 50K per year, does it makes sense to pay $17K per year on insurance?? Aka 34% of your income?? No.

It does not make sense. We do not even have to talk about BS such as life worth.

Stop doing "Bait and Switch".

It is WORTHWHILE for a person to buy certain amount of insurance. A good insurance agent work with customer to find out the RIGHT and REASONABLE amount instead of BS like life worth.

What I am AGAINST is people doing "Bait and Switch" and FUD. I welcome people to EDUCATE and come up reasonable number and calculation.

Dreamer

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Added on May 4, 2009, 7:44 amTo ALL Insurance Agents in This Thread,

I do not slam you indiscriminately. For example, the above posts are the kind that educate consumer and make us a BETTER Insurance customer. Keep those coming. That is what we needed. I am trying elevate everyone's knowledge on insurance.

Now, however, if you do some "bait and switch" or FUD without doing your proper homework, you are FAIR GAME to me.

Dreamer

This post has been edited by dreamer101: May 4 2009, 07:44 AM

Yous BS is that once BSA over 200k, premium will increase exponentially. Which I proved you otherwise.
So prove me wrong as simple as that.
If such a simple maths you also can't prove me wrong, then just stop all the BS and assuming. Just get quotation from the agents you know, paste here and tell us "Nah! The premium DO increase exponentially." which you still can't prove.

bbjslee,

So what?? My goal is to EDUCATE. Get people to think about the coverage amount and what make sense for them. See the numbers and get multiple quotation over multiple coverage amounts. This is MUCH MUCH BETTER than LIFE WORTH concept which essentially say that you cannot buy TOO MUCH life insurance for most people.

EDUCATE. Teach people to think for themselves. There is NO single right answer for EVERYONE. But, we could teach people on what they need to think about.

I succeeded in doing that.

Dreamer

Dreamer, it seems you are not educating anyone at all. What you're doing is actually what you are accusing us of doing, black-seeding your opinions into other people's heads.

When a person educates another person, the teacher does not give ultimatum decisions. Here you're telling people "DO or else you're doomed". That is not educating anyone at all. Educating means "Have you thought about doing it this way? because -reasons as follows" or "How about looking at it in this perspective ? because - reasons as follows"

Secondly your 10 year buffer rule looks good on paper. Ideally it is nice to have a 10 year buffer, but in a realistic world, that is difficult to attain. I agree with you, on this statement:

If John Doe rakes in 50k per annum, it is absurd to set aside 17k for insurance. This is an unrealistic figure. The amount set aside is based on the customer by asking, "Mr John Doe, in the event you aren't around, how many year's salary would you like your family to have to assist them in moving on?"

Moving on, if a tycoon has 10 million in assets, paying 200k premium per year is peanuts to him. Why so I say that?
Firstly, chances are his lifestyle and his family lifestyle are above the mean of our society. Two He probably makes way above 200k per year. Like I said, it goes back to the customer by asking that very same question. If they buyer sees the value in it, price will not matter.

Some people see value in Iphone and are willing to pay 3k for it. Do you slam them and say "You're overpaying for a phone?" I highly doubt so. Therefore why is this different? You may not share similar value nor importance for insurance, and I respect your decision Dreamer.

I cannot stand here and condemn you on your opinion, but please - don't black seed that opinion into other people's head. Other people might have different value system than you do. You're free to educate - but telling them "Noooo, don't need. Wasting money. Don't, it's lousy" - these are black seeding. You can tell them opinions backed up with logical and sound reasoning, but leave the deciding factor to themselves.

And lastly, seeing your track record of debate with me, it appeared that time you were misinformed, to which you still haven't gotten back to me regarding Malaysia's distribution law and law regarding a person's demise - YET so confident you were telling people that Single people don't need life insurance if they live with their parents and have no dependents
Did you realize what damage you could have done if someone actually believe those words? How some poor parents would have their child's assets all frozen unable to use? How they might not even have enough money to conduct burial ceremony properly even in their grief?

For the funeral thing, the parents can claim the insurance and get payment within 2 days after child's death?

Not within 2 days. I hope you're not being nit picky about this. Let's say the claims is done ASAP which is the quickest that I have known, 2 weeks (with all appropriate documents)

Even so, initial burial cost is taken care by the parents, but at the end of two weeks they are 'reimbursed' which means their retirement fund did not deplete.

The industrial standard now is within 2 weeks.
If it takes more than that, probably due to some other reasons such as insufficient documents.

Tatsumaki,

<< If John Doe rakes in 50k per annum, it is absurd to set aside 17k for insurance. This is an unrealistic figure. The amount set aside is based on the customer by asking, "Mr John Doe, in the event you aren't around, how many year's salary would you like your family to have to assist them in moving on?">>

So, that means you AGREE with me that life worth is MEANINGLESS to determine how much coverage that a person should have. Why are you keeping quiet while somebody is spilling useless stuff on life worth??

<<Moving on, if a tycoon has 10 million in assets, paying 200k premium per year is peanuts to him. Why so I say that?>>

Now, if a person has 10 millions in assets, why would a person buy LIFE INSURANCE to begin with??

Do I need to remind you the BASIC about LIFE INSURANCE?? LIFE INSURANCE is used to protect LOSS of INCOME. In many cases, with 10 millions of asset, most of the income could be PASSIVE. Aka, the person could die and the level of income does not change much. Hence, NO RISK of loss of income due to death. NO RISK = NO NEED for LIFE INSURANCE.

<< You're free to educate - but telling them "Noooo, don't need. Wasting money. Don't, it's lousy" - these are black seeding. You can tell them opinions backed up with logical and sound reasoning, but leave the deciding factor to themselves.>>

So what?? With SO MANY insurance agents out there OVER-SELLING insurance, my point of view is NEEDED to balance out those biases. YOU are not going to tell them when they do not need insurance. I have to do this to balance out your biases.

<< Did you realize what damage you could have done if someone actually believe those words? How some poor parents would have their child's assets all frozen unable to use? >>

In YOUR EXAMPLE, there is NO ASSET. There are LIABILITIES. So, why should PARENTS pay for the liability??

Dreamer

This post has been edited by dreamer101: May 5 2009, 06:32 PM

Ok, I have a question.

I am in the middle of reviewing all my insurance policies for myself, wife and kid. The reason is I think I've overbought, and am paying too much currently.

For policies with are investment-linked, is it feasible to readjust the policy to cut out the investment portion? Or is my only choice to surrender the entire policy?

What's the Insurance Company? Each company has different policy regarding this.

@Dreamer:

I said that 17k per annum is high, but no where did I mention that life coverage is a waste of money. It appears you did not comprehend my sentence. I'll break it down for you for easier understanding

Ideal: 10 Years salary worth as backup
Realistic: X years (based on client's discretion)

Ideal: 17k premium for the 10 year salary coverage
Realistic: YY premium based on client's decision.

What I am saying is that realistically speaking, John Doe cannot afford 10 year buffer plan. What he can afford is let's say a 3-4 year one?
3 or 4 Year's worth of salary definitely is a good place to start off should John Doe pass away leaving his wife and two kids (age 10 and 13).
So please, don't put words in my mouth when you have misunderstood the sentence in the first place making me turn out to be the bad guy.

Why do people accumulate wealth? For various reasons. Do people like to spend this wealth simply? (some do but majority don't)
Even when a person has 10 mill worth in assets, would this person want his assets to decrease at the time of his/her demise?
Chances are, no. They would want 100% of their hard earned wealth be left behind for their beneficiaries.

You made a huge assumption that these 10 million were passive assets. I'll give you that. Perhaps this person owns shares to a hotel or a restaurant. Assets is just one thing. People don't dig into their assets to buy. What do I mean. Let's say you own a hotel, or a chain of hotels.

Would you sell your hotel to purchase say an empty plot of land? Quite likely not. You'd more likely use the profits from the hotels you own to make the purchase. This means you still have income (coming in from the hotels) on top of the assets you own (the actual physical hotel buildings which sum to 10million)
What the life insurance does is to temporarily supplement the income part, not your assets.

You mean to tell me, if a tycoon passes away, the spouse has to start selling the assets (shrinking it as time goes by) just to maintain their standard of living? Changing lifestyles isn't easy. Usually the rich people have different lifestyles and suddenly the lost of the bread winner or 'stable income' results in a drastic change in lifestyle which many people may or may not adapt to. This is where the proceeds of life insurance acts as a buffer.

Being an IT literate person, are you going to tell me there that you don't back up your important files? You just store them on one hard disk risking a bad sector or wear and tear that one day the disk will stop functioning?
Having 10 million assets you're telling me "But my hard disk is 2 Terrabytes, so I don't need to back up. I have more than enough space"
I hope you see the logic there, operative word being Buffer

Thirdly, I have told people that they are sufficiently covered at the moment. Did that satisfy you? I've clients whom has purchased from other companies, to which when I made a review for them, they had enough and I moved on. My intention is the person's well being, not the number of sales I make. If that person's well being is taken care of, then my goal has been achieved.

Fourthly, you should realize that assets could turn into liabilities. Same example, single person, unmarried, no dependents and living with parents.
You asked Why should the parents shoulder the liability?
The answer, because it is our law my friend. I didn't make this up to "win the argument"
This is our Malaysian Law
Creditors have the right to make claims on the deceased estates via their next of kin. If you don't believe me, ask a lawyer who is familiar with these laws.

Fourth point one, the son or daughter might have an apartment, let say for investment or rented out. This was an asset while the person was living. Upon the demise, it turned into a liability. Who is going to pay the loan? (This is where MRTA steps in. MRTA is an insurance coverage see?)

Property is one, what about cars? Let's say the son or daughter owned a car. Who is going to pay for that car now? Asset: Car. Liability: Car. See the correlation?
Credit card bills? Who will pay those? Back to the question again - If somehow supernaturally I was able to communicate with the dead and I asked the deceased:

"Are you comfortable that your parent's had to use their retirement fund to settle your debts, and conduct your funeral?"

What do you think the answer would be?

This post has been edited by Tatsumaki: May 5 2009, 02:01 PM

Tatsumaki,

I think you misunderstood what Dreamer101 is trying to say. its not that you shouldnt buy insurance, its that you should only buy reasonable and adequate insurance (ie, dont overbuy)

to use a car analogy, you keep a spare tyre for emergency; but you dont go around carrying 4 spare tyres, right?

the more important question is : how much is reasonable and how much is adequate? some rule of thumb would be helpful

and i think you have gotten your assets/liabilities mixed up. if a house is an asset, the rental should cover/exceed the mortgage payment. personally i never put much weight in "capital appreciation" for determination of asset/liability.

and a car is never an asset.

and the rich person has not done a good job as a parent if his kids are not more or less financially independent upon being an adult. that is why term life is a good choice (you only cover yourself until your youngest kid reach 21, for example)

Which is why I always revert to the sentence "based on the client's desire" (with regards to sum assured) Some people want more, some want less. Perhaps I could have misinterpreted it wrongly, but from previous post, Dreamer has taken the standpoint that life insurance for the single person, without dependents whom is living with parents is totally useless.

To answer your question, the general rule of thumb would hover from 3-4 years gross salary if the main or sole bread winner is not around.

You're correct, when people rent out it covers the cost of the loan, therefore making the property self-sufficient. My mistake that I wasn't clear enough. When I mentioned property it referred to both which are rented and some whom might not be so fortunate whom are unable to find a tenant.

I can't go and tell another parent "Hey! you didn't do a good job bringing up your kids!" now can I?
Yes term insurance is a low-premium high coverage plan which some people prefer, without the frills and fancy of dividends.

Regarding wealthy families, there are cases where the parent isn't too trusting of their children in the sense they fear that their wealth might be squandered away when they (the parents) are not around.

Annuity type insurance coupled with will is also a tool to supply enough cas for the child, but not releasing all of it one go until the child reaches a certain age (here we link age with maturity) where only then the child can inherit all the wealth.

but "client's need/adequate" is not the same as "client's desire". I may desire a 10 million payout upon my demise, but do i need 10 million? with no loans other than PTPTN, 50k may be adequate for me to payoff PTPTN and to pay for my funeral.

as a single person without dependent, i only need enough life insurance to payoff debts that can get transferred to next-of-kin and NOT the 3-4 year gross salary.

however i have no idea whats the suitable amount for MEDICAL CARD or CI/TPD coverage that i really need. or is there standalone income guarantee insurance (say 20k/year upon my disability (not tpd) until i'm 65 years old)

I'm annoyed at the rising medical cost (but if worse come to worst can always go to GH); I'm scared of CI; but i'm terrified of TPD. Death is the least of my worries

I can predict what Uncle Dreamer will say.

You DO NOT need insurance.
If you need insurance to pay off your debts, your financial planning is in bad shape. You SHOULD NOT get insurance.

Hello people,

I have a question.

Let's say I calculate (by using Excel) by retirement age I would have RM 1.5M in EPF a/c.

This retirement nest egg is on prediction that I am able to work without interference until my retirement age.

I want to buy an insurance product that can guarantee/assure me that amount should I am unable to work due to death or infirmary.

What sort of product should I get?

It has to be at the lowest cost.

Insurance agent... help pls.

Xuzen

Tatsumaki,

If the rule of thumb is ONLY 3 to 4 years of gross salary, why do we care how much a person's life worth?? That is what bbjslee claim coverage amount should be based on.

Dreamer

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Added on May 5, 2009, 6:43 pmTatsumaki,

You are INSURANCE AGENT. Your GENERALIZATION always BIAS towards buying insurance. So, i have to point out situation that it does not make sense.

Dreamer

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Added on May 5, 2009, 6:51 pmlin00b,

<<as a single person without dependent, i only need enough life insurance to payoff debts that can get transferred to next-of-kin and NOT the 3-4 year gross salary.>>

The GREATEST FINANCIAL RISK at this stage is NOT death. It is DISABILITY. Being YOUNG, if you disable, you have LONGER TIME to live and that costs a lot more money than dying. Now, the chances of getting sick and CI is lower for YOUNG people.

So, if you want to buy insurance, adjust coverage based on this priority, form high to low

A) PA -> This is cheap and high risk in Malaysia

B) TPD

C) Life

D) Medical

E) CI

How much coverage do you get from your job?? That might lower some of the coverage.

Dreamer

This post has been edited by dreamer101: May 5 2009, 06:51 PM

There can be no price to put on a person's head where we can come to a mutual conclusion. We can argue till the cows come home, but pegging a price to a person's head is not what I am aiming to do.

Remember when I mentioned gross income? I will take that example, the Nobel Prize dude. I agree, perhaps lets say his life is worth 34 Bajillion dollars reason being he discovered Time Travel. The reason why his life is worth so much is because this is an intelligent person.

Who knows what more he can discover!
Fine and dandy. Back to the topic, his salary for his family. His salary for his family has nothing to do with what his life is worth. Is some NGO paying him 34 Bajillion dollars each year?

So you have to take two things into consideration when you're talking about Life Insurance & Sum Assured which are:

a) A person's gross annual income
b) How much he or she would like their dependents/family to have in the event of premature death.

Now we're not going to argue family man versus bachelor anymore are we? I take it by your silence that you did not rebut my points about Malaysia's Distribution law and how creditors can chase after the deceased, that at least we reached a point of mutual understanding.

Lastly, you can be bias against Insurance, I frankly and honestly respect your decision. I am in no position to stand here and tell you that you're wrong, I'm right - No authority.
However, I'd like at least the opinions to have some sound reasoning or facts.

For example, should I make claims like : Mr. ABC is a terrible person. Fair enough - Why?
Reason being he burnt my house down on purpose 2 years back.

There is an opinion, and a reason. Maybe we might not agree that the reason is concrete enough, but as long as there is a reason, I can accept the difference in opinon. What I cannot accept is claims like:

Mr. ABC sucks - Why? Because he sucks. He's a bad man, a terrible person.
Reason: None.

If lowest cost is your greatest factor in decision, I would say Term Insurance would be the appropriate one.

This post has been edited by Tatsumaki: May 5 2009, 07:01 PM