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Chicken or Egg? Addressing Insurance’s most controversial questions.

Posted 5 March, 2017 by Surely
in Educate Yourself

Is the rebooted Nokia 3310 worth buying?
Putin – an evil dictator or a political genius?
And moving closer to home, the biggest and latest controversy here seems to be whether the cost of water has really increased by 30%.

There are almost no correct answers to these controversial topics.
The reloaded Nokia may not possess the latest technology but its iconic design brings back fond memories of our long-lost youth.
Putin can be both.
Well, we decline to comment on water price, out of respect for SC Davinder Singh.

 

Enough said.

Enough said.

 

Similarly, there are some difficult questions to answer when it come to life insurance.
They have no obvious answers and depend mostly on your point of view.
Let us look at some of them and try our best to provide some insights to them.

 

Term and invest-the-rest versus Whole life policies.

 

Buy term insurance and use the savings to do your own investment.
That is one school of thought.
On the other end are people who believe in having Whole life policies as part of their portfolio.

The first method offers much more flexibility.
Bond, stocks, commodities, properties are some examples of many people’s choice of investment.
Basically, the choices are unlimited.

 

Well, that may be an investment option too.

Well, that may be an investment option too.

 

Those who select this path are aiming for a superior return which provides a shot at acquiring the ability to self-insure in the long run.
Which in turn save them more money.
This also gives individuals a better shot at financial independence as more funds are made available for investment.

At the same time, it comes with elevated risk.
Losing all your saving is very possible when one makes an undesireable decision.
Thus, it is not a choice for the faint-hearted.

Placing your money into Whole life policy and being happy with mediocre returns is a much safer option.
It serves as a safe haven for the financially disinterested folks.
Hold a whole life policy for more than ten years and it will probably break even.
Longer? You may be able to attain a profit.

The downside is that there is virtually no upside and no control.
You cannot do anything to change your returns.
The insurance companies will decide how much you will be getting each year.

Verdict:
Term & invest for the financially-savvy and risk-inclined.
Whole life insurance are more suited for those who just want their money safe and sound.

 

Does the insurance companies, that you buy from, matter?

 

Some prefer the good old British ones.
Japanese companies seem to give better bang-for-buck.
On the other hand, supporting local seems to be the right nationalistic way to go.

There are many reasons to prefer one insurance company over another.
It may be their prestige, history or simply their fantastic logo.
It could also be due to the agents that you met.

Whatever reasons you may have, you can almost guarantee that someone is going to oppose your ideas.
At least you know that the advisors from other companies will have their rebuttals ready.
And in our opinion, the insurance companies should not matter too much.

Why you may ask.
A history of strong returns, a stable of service-oriented staff or a strong financial position should make a difference.

However, buying an insurance policy is a long-term decision.
Current service level and financial position may be compromised years later.
And historical returns are not indicative of future bonuses.

It really does not matter.
Getting the right product with features that best cater to your needs is more important.

After all, we have MAS to make sure that all insurers remain solvent.
And SDIC to protect your insurance policies.
Thus, you can choose any company and your insurance plan will still be secure.

Verdict:
It doesn’t matter – getting the right coverage is more crucial than selecting the insurance company itself.

 

Direct Purchase or Financial Advisor?

 

Direct Purchase Insurance (DPI) serves a basic need.
They are undoubtedly cheaper as the commission is cut out.
However, you may need to be careful about the lesser coverage.

For example, DPIs with critical illness merely cover 30 dread diseases whereas most other products cover more.
In addition, you have no servicing agent and thus you are pretty much on your own.

An advisor can help you with the planning, proposal form, claims, etc since you are paying a commission for their service.
Usually, no one has any issue with that.
Except when service is lacking. That is when one feels shortchanged.

 

But we heard some good things about ClearlySurely.com

But we heard some good things about ClearlySurely.com

 

On the other hand, DPIs is less costly and you can deal with the insurer when the need arises.
If you are educated and independent and wish to lower your insurance premium by doing it yourself, we have an array of DIY services – learning materials, insurance needs engine and price comparison.
Should you decide otherwise, let us recommend an advisor to assist you.

Verdict:
No matter what your preferences are, ClearlySurely.com has your back.

 

Early Critical Illness – to buy or not to buy.

 

Some are skeptical about getting an early critical illness policy.
We don’t blame them.
It is reasonable from their point of view.

Early CI coverage is way more expensive.
Sum assured is much less.
It makes sense to save, put aside that bit of money and self-insure instead.

 

A huge sum of money can be your best insurance.

A huge sum of money can be your best insurance.

 

One may also rationalise that if he does not have the habit of having annual checkups, it is extremely hard to detect illnesses early.
But it is akin to saying that if you are an alcoholic, there is no point getting a car insurance anyway since you are most likely drunk when driving.
Doesn’t it make more sense to start changing your habit for the better?

Early detection of cancer results in better survival rate.
Development of disease detection is improving day by day.
You may just need a breathalyser to detect cancers in the near future!

Verdict:
You need it. Unless you have saved enough to protect yourself.

 

Conclusion

 

We do not claim to have all the answers.
After all, these are some insurance conundrums that have caused many arguments even among the life insurance veterans.

At the same time, it may not even matter.
It is a matter of preferences.
As long as you know what you want and who you are, your decision is as good as anyone else.

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

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