QUOTE(yklooi @ Oct 27 2021, 11:15 AM)
on that
"the first 6 years is basically paying for the insurance company profit and agent commission, if decided to surrender early. Even never surrender, after 20 years, it is still nett lost after factor in inflation and average ROI"
the 1st 6 years is NOT basically paying for the insurance company profit and agent commission,...it includes the insurance cost to provides you with insurance coverage for that duration too
thus if you decided to surrender early, that insurance cost paid out by the company for that insurance protection during the first 6 years,...needs to be recovered from you too.
i think i read it somewhere before,...it needs about >14 yrs of to beable to see the accumulated premium paid vs the surrender value breakeven points...without considering the insurance coverage provided by them...
btw, that breakeven points does not factor in inflation too.
on that
"Even never surrender, after 20 years, it is still nett lost after factor in inflation and average ROI"
insurance saving plan had been mentioned many times to have an IRR of about 2~3% if held till maturity...
this is same with average saving rate of banks.....isn't it is still nett lost after factor in inflation and average ROI? will FD rates be the same too?
not to forget....saving in banks does not provides you with insurance coverage like your insurance plan does during that duration.
well, I think you get the point of what I try to say now.
what insurance coverage? The savings plan I have is refund in full for what I have paid if death in accident.
The scenario u have provided is maybe true, if the premium is on the lower side, like few hundred ringgit per month for clients earning below 10k
For people with 5 figures monthly income, paying few k premium per month for such savings plan. The scenario is not same already.
2%of 10k vs 2% of 100k
200 vs 2000
200 per year probably can't get good insurance
2000 per year, there should be good enough for young adult for insurance coverage
The insurance savings plan I have now is basically refund full amount, plus or minus single digit %I forgot already, if death in accident, if died in sickness, it's less iinm
If no death, upon 20 years, nett a 2% roi year
Death, agent earn commission for the first 6 years, insurance company lose, client no lose no win(getting back what have been paid)
Still alive for 20 years, agent earn commission till the 6th year, insurance company earns by holding(reinvest) the cash for 10 years and refund the client for 2% roi per year.
Client factor in inflation, lose
100k put in fd for 2%, can take the 2000 per year to buy any insurance protection plan. The 100k can withdraw without any penalty or sales fees
Or 100k can put epf for min 4% to lock up, and let the compounding works for 20 years.
From my perspective,
I basically can't see the usefulness or advantage of such insurance savings plan.
If I want to bet against my lifespan for next 20 years , won't I purchase life insurance instead?