Cory Diary : Term Policies - Insurance Series

In my earlier article ( here ), I mentioned a return policy that refunded a sizable amount of money after more than 27 years. This cash has become handy now as I can deploy it as part of my overall passive income or for emergency needs. Additionally, the insurance element was minimal, and surrendering it has reduced my monthly payment outflow.

Portfolio Growth

Over the next 10 years, I aim to see growth in my equity portfolio, which primarily focuses on dividends. As I approached age 55, one of my key concerns that could derail this plan—aside from investment risks—is my health that requires substantial money. While I currently do not have any significant health issues I need insurance to manage this risk. Unforeseen events such as death could still impact my family's financial stability. However, this would not place a heavy burden on my net worth.

Term Insurance ( No Saving Element )

Since my children are still young and my partner is not yet well-versed in managing investments, my family may not be ready to handle the portfolio independently for the next few years. To address this, I plan to secure insurance that can help defray medical costs. Fortunately, I do not have any major health conditions that would prevent me from obtaining new policies. Recently, I secured two additional term policies: one focused on critical illness coverage until age 85 and another offering more comprehensive coverage for a limited period (customized to age 70). While term life insurance is not cheap at my age, buying early could have helped reduce costs. However, considering total expenses and priorities earlier in life—such as life insurance and housing—I believe it was a reasonable trade-off.

Next ...

Next, I need to list all my insurance policies and simplify their details so that my partner can manage them easily if something happens to me. Frankly, there are quite a few details about my older insurance policies that I only recently learned myself. Many of these policies are managed through CPF deductions, which are beneficial but somewhat unfamiliar to me. Especially those private Insurances that deduct using CPF funds.

Wish

My wish is for CPF to make the process even more seamless by enabling better insurance nominations and offering customized individual benefits details within CPF, and monitor/claims through CPF instead of doing on our own, with the private insurance. In the past, I lacked the time or inclination to address these matters; however, now that I am retired, I have started working on them. This task is already halfway done.

A Sharing of My Learning Journey... please dyodd.

Cory Diary

2025-0316

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Insurance Policy Returns

In my early article, decided to surrender my GE Dynamic Prolife with Cash Policy. It has been with me for more than 27 years. I originally planned to surrender it years ago but was tied up and other constraints. Finally, I am able to do it this week due to ability to do it more effortless now. GE has improved their process.

I am one of the sceptical guy who is worried what I will get when the policy surrendered as it will be too late to find out on surrender. Well, I finally got my answer this week. when i submitted my request and into my bank account. I kept records of most of the transactions. So able to do Return assessment roughly.

My XIRR returns is about 3.93%. If I have surrendered earlier by about 2.5 years, rough estimate assuming deducting away 2.5 years of premium, maybe about 4.2%. All this numbers are done quickly with my limited time and knowledge. Please dyodd and consult your own FA. Uncle is newbie when come to Insurance.

Compared to T-Bills, SSB and FD, this looks ok imo. Is a long 25 year wait but seems worthwhile if we considered this period. In-addition, that time 27 year old me don't even know about Stock Market. And today I have a sum to make this money work for me further.

Maybe I should include this as an achievement ?

Cory Diary

2025-0216

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Life Insurance Policy - Updated

When we first graduated, many of us in our time will be asked to buy Insurance Policy. Not sure about now but possibly except that with Covid maybe harder to sell. Getting information to know about our insurance policy is much easier now than before through login using singpass.

Is great they have worked to integrate the login process with singpass. And that we could see all the policies with the insurance company. Here's a glimpse on a Life Insurance Policy. If the insurance company promise as planned, is a good diversification for the descendent .... . Why I say so.

Projected Death Benefit at age 50 : 173k

Surrender Value : 66k  ( Yield : 4% )

The surrender yield get lower as one aged. At 69 will be 3.35% Projected again.

Basically from the looks of it, will lose slightly more than 100k if we are to surrender it. Again all this is non-guaranteed since they are all projections.

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Interestingly the policy also provide projection if we hold on to the policy till age 55.

Projected Death Benefit at age 55 : 189k ( Increase of 12k )

Surrender Value : 87k  ( Increase of 21k , Yield : 3.93% )

The surrender value increases much more than the death benefit but the yield gets lower.

----------- Part 2 -----

Decided to continue with my exploration after consultation with the agent because I feel is important. She provides me the guaranteed and non-guaranteed ratio on each age group.

The non-guaranteed portion is about 31% of the projected value. To get the compounded returns, this can be easily done using the monthly payment with the the final return ( Upon Death ) at 50 , 55 or 65.

So plugging in my monthly contribution of the Life Insurance Policy ( excluding rider ), the XIRR or compounded returns is near to 8.7%. This is quite a surprise even though there are non-guaranteed component is in there. In total it is even better than S&P500 Performance. If we surrender the Policy, returns drops to 2%.

Wow. Please Check on Me by login in to count your Life Insurance Policy.

Cory

2021-0704

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Cory Diary : Life Insurance - Part One

This article is to share my experience on an insurance policy i have for 20 years which I plan to surrender at appropriate time. Do note this maybe specific with my insurance company and time frame which may vary widely in expectation with others.

Insurance : Whole Life Plan wTPD and have reach 20 years where I am entitled Bonus (Guaranteed and Non-Guaranteed). I heard about cases where the non-guaranteed portion did not happen to expectation. So wonder do the unfortunate happen to me too. :P


Insured amount : $70K (~)
Cash back received : $25K (~)
Monthly Payment: $200 (~ )
Last check with support call : Net Surrendered Value about $50K (~)

When I check for surrender procedures here's what I got.


"We are sorry to hear of your intention to surrender your policy.

May we say that it is not to your advantage to surrender a policy because:
(1) Your insurance protection comes to an immediate end.
(2) Your surrender value could be less than the basic premiums paid, especially in the early years of the policy.
(3) You pay a higher premium for a new policy in the future.
(4) The premium for a new policy may not be as attractive as before. Or, you may not even be offered a policy at all.

You may wish to consider other alternatives. You could:
(1) Convert the policy to a Paid-Up Assurance or Extended Term Assurance without having to pay further premiums.
(2) Reduce the Sum Assured and pay a smaller premium.
(3) Continue the policy under Automatic Premium Loan (APL)* provision, until it is convenient for you to repay the loan.
(4) Take a Policy Loan * if you need cash quickly.

* (Interest on APL and Policy Loan is currently at 6.0% per annum on the daily balance.)

Should you still decide to surrender your policy, please complete and submit the attached forms to us for processing. Please note that faxed or scanned copies of the forms are not acceptable."

If I compute all my returns and premium paid to date for every transactions, and if my surrendered value indeed realized per their confirmation, XIRR roughly 4%. If so is like a form of saving with Insurance element in it. 

Currently the surrender process is a hassle as I am based oversea. So it may take a while before I initiate my request formally.

thanks

Cory

20171022