QUOTE(lol~ @ Apr 26 2019, 12:25 PM)
Hi, i received a letter from my insurance company saying that there will be a change of contribution due to age factor. They will increase it. Is this something that they can actually do? Its my fault that i didnt ask my agent last time on this matter but i did read last time that the contribution will be fix until the end of contract
I read my cert just now to re confirm but i could not find anything related to the change of contribution due to age factor. Anyone can help me on this?
It's common. Look at the cost of insurance or insurance charges in your proposal. It goes up around 5-6% a year at a younger age and >15% as you grow older. Ask your agent to show you the cost of insurance at an older age and see that increases exponentially.
Insurance companies are basically using the surplus from your premium at a younger age to invest and cover the cost of insurance as you grow older. Problem is that you're subject to the whims and vagaries of the investments made by them.
Also, in newer proposals you'll see messages like this:
QUOTE
WARNING YOUR INSURANCE CHARGES WILL INCREASE AS YOU GET OLDER. IN THE LATER YEARS, IT IS POSSIBLE THAT THE ACCUMULATED FUND VALUE IS NOT ENOUGH TO PAY FOR YOUR INSURANCE CHARGES DUE TO POOR INVESTMENT RETURNS, WHICH WILL RESULT IN YOUR POLICY BEING CANCELLED. YOU MAY NEED TO INCREASE YOUR PREMIUMS VIA TOP-UP PREMIUM, OR REDUCE THE LEVEL OF INSURANCE PROTECTION, IF YOU WANT TO MAINTAIN YOUR POLICY.* * You should ask the agent/broker/financial adviser to explain to you about the insurance charges and its effect on your future insurance coverage.
Or:
QUOTE
IMPORTANT:
THIS IS AN INSURANCE PRODUCT THAT IS TIED TO THE PERFORMANCE OF THE UNDERLYING ASSETS, AND IS NOT A PURE
INVESTMENT PRODUCT SUCH AS UNIT TRUSTS
- You should read this illustration together with the fund fact sheet(s) of the investment fund(s) which you have chosen.
The fund fact sheet(s) contains all the important information that you will need to know regarding the investment-linked fund(s).
- Since only 45% of the Annual Premium for the first policy year and 55% of the Annual Premium for the second policy year is used to purchase units, while 95% of
top-up is used to purchase units, you can maximise your investment value by minimising your annual premium and maximising your top-ups.
- Minimum Annual Premium Required: RM1,200
- Minimum Single Premium Top-Up allowed: RM500
- Minimum Annual Regular Premium Top-Up allowed: RM120
- Therefore, if your purchase involves a premium of sizeable amount say RM5,000 and above, you should consider purchasing single premium investment-linked
policy (rather than a regular premium policy) as single premium plans offer better allocation rates for investment.
- Your investment-linked policy will lapse if there is not enough units in your fund to pay the charges. Your units may not be enough over the years due to:-
- High insurance charges if you buy many riders, and especially if the charges are increasing over time as you get older.
- Poor investment returns.
- If you stop paying premiums.
WARNING
YOUR INSURANCE CHARGES WILL INCREASE AS AGE INCREASES. IN THE LATER YEARS, IT IS POSSIBLE THAT THE ACCUMULATED FUND VALUE IS NOT ENOUGH TO PAY FOR YOUR
INSURANCE CHARGES DUE TO POOR INVESTMENT RETURNS, WHICH WILL RESULT IN YOUR POLICY BEING CANCELLED. YOU MAY NEED TO INCREASE YOUR PREMIUMS OR REDUCE
THE LEVEL OF INSURANCE PROTECTION, IF YOU WANT TO MAINTAIN YOUR POLICY. *
SUMMARY ILLUSTRATION
- This summary illustration is intended to show the movements of possible cash flows for the investment and the impact of fees and charges on Fund Values
based on illustration below.
- The projected investment returns used below are for illustrative purposes and not meant to show possible returns of your chosen investment-linked fund(s).
- They are not guaranteed and not based on past performance.
- Actual returns of the fund will fluctuate (i.e. rise or fall) each year based on the performance of the assets at the fund invests in.
- The actual returns may even go below the projected rates or become negative.
* You should ask your agent to explain to you about the insurance charges and its effect on your future insurance coverage.
After looking at almost all plans from various companies, my own projection is that all of them will require you to top-up significantly as you grow older (mid-70s) if the investment does well, and even earlier like your late 60s if they don't do well.
I'm treating them more like a hedge against any unexpected events while my I'm the main provider. After my kids have grown up and don't need me to provide, I'll terminate the policies and cash out. Personally, don't see a point of holding them on for too long and letting all the invested funds run out when I'm old and need to top up tens of thousands annually.
Apr 26 2019, 12:25 PM, updated 7y ago
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