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Financial: The useless ILP,& how to go about terminating it

JohnTan

Alfrescian (InfP)
Generous Asset
#21
i, personally, also know an ex insurance agent who in his peak, like what you say, was well regarded as high achiever, only during his heydays. but now at age 50+, he is borrowing money from relatives, and finding ways to make a living. i regard this insurance industry as a scam, a kind of its own. the petite number of millionaire insurance agents that you mentioned, are the living advertising tools to attract the more young and gullible into this industry. the older i get, i start to appreciate CPF and medisave. the money in there is best secured by the gahment. sinkies, are not very bright pple, in many instances, they get ripped off by scams effortlessly. I am willing to let my cpf money used by gahment for implementing their long visioned plans to build a better country for the pple.
Most of these top agents I know are only good in their early years on the job. They are youthful, energy, energy to please, some even ready to sleep their way to their sales quota.

These agents who push savings plan often don't save. Their managers expect and encourage them to live beyond their means as a form of professional success. Many change cars every few years, or buy condos whose mortgage they can barely service.

Most, as you described, are not doing well by their 40s or 50s, when they are physically unhealthy, too much binge eating and drinking, and hardly any savings or successful investments to their names.
 

Engeng

Alfrescian
Loyal
#22
Insurance isn't about returns in the first place. It's about planning for your loved ones should you meet an early death.

If you buy an investment linked policy for $250,000 today and die next week your family will receive the full sum assured even though you have only paid one installment. I can't think of any better return than that.

Insurance is a bet. The insurance company is betting that you will live till the the maturity of the policy and hence they'll make a shit load of money out of you.

You on the other hand are betting that you'll die quickly so your family can maximise your return on investment.
Oh you have the same boring and ridiculous thought as me when young. Yeah what better return is there than life insurance: pay $100 instalment get $100,000 in return when you die and plus free critical illness coverage? But must be life insurance only. Endowment don't give that much coverage but gives higher investment return.
 

JohnTan

Alfrescian (InfP)
Generous Asset
#23
Oh you have the same boring and ridiculous thought as me when young. Yeah what better return is there than life insurance: pay $100 instalment get $100,000 in return when you die and plus free critical illness coverage?
The return is meant for whoever inherits your stuff.

You get zero return because you are already dead and gone.
 

Engeng

Alfrescian
Loyal
#24
Buy a term insurance, a couple of participating fund living policies and invest the rest in index funds. This strategy forces you to save, be flexible with investments and best of all, covered and liquid.. most people often forget about being liquid.
Term insurance is expense not liquid asset and I recall a quote was not that cheap too. Participating fund living policies are definitely not liquid, probably ten years or more to break even. I have that too so I know. Only buying index fund is liquid but no coverage. So as long as buying insurance means not liquid.
 

yellowarse

Alfrescian (Inf)
Asset
#26
Term insurance is expense not liquid asset and I recall a quote was not that cheap too. Participating fund living policies are definitely not liquid, probably ten years or more to break even. I have that too so I know. Only buying index fund is liquid but no coverage. So as long as buying insurance means not liquid.
Of course term insurance is an expense, not an investment. It's a bet to cover your ass that you have to put because the consequences are drastic, e.g. a family bereft of a sole bread-winner, totalling your and somebody else's cars, your house going up in fire.
 

Engeng

Alfrescian
Loyal
#27
Of course term insurance is an expense, not an investment. It's a bet to cover your ass that you have to put because the consequences are drastic, e.g. a family bereft of a sole bread-winner, totalling your and somebody else's cars, your house going up in fire.
There is a difference between term insurance to cover house, car, medical and one to cover life. Only the last one is a bet to gamble for profit. You can buy as much as you think your life is worth. Whereas the rest can only claim the actual loss as incurred with no profiting element aka not a bet but a necessary expense.
 

yellowarse

Alfrescian (Inf)
Asset
#28
There is a difference between term insurance to cover house, car, medical and one to cover life. Only the last one is a bet to gamble for profit. You can buy as much as you think your life is worth. Whereas the rest can only claim the actual loss as incurred with no profiting element aka not a bet but a necessary expense.
Actually even your life has a 'cost' to it. If you could earn an average of $60K a year (not a lot), you'd make $2.7 mil after 45 years of your working life. But what if you died only within 5 years of starting work, leaving your spouse and kids shortchanged of another $2.4 mil that you'd have earned if you'd worked till retirement?

Is it then unreasonable to take out a $1 mil or $2 mil policy to protect against such an eventuality? Sure, you could bet big and buy a $10 mil policy ... but can you afford the premiums on your salary? In fact, most people underestimate rather than overestimate their earning power when it comes to buying a life term.
 

Engeng

Alfrescian
Loyal
#29
Actually even your life has a 'cost' to it. If you could earn an average of $60K a year (not a lot), you'd make $2.7 mil after 45 years of your working life. But what if you died only within 5 years of starting work, leaving your spouse and kids shortchanged of another $2.4 mil that you'd have earned if you'd worked till retirement?

Is it then unreasonable to take out a $1 mil or $2 mil policy to protect against such an eventuality? Sure, you could bet big and buy a $10 mil policy ... but can you afford the premiums on your salary? In fact, most people underestimate rather than overestimate their earning power when it comes to buying a life term.
Of course a bet can only be as big as we can afford from our salary. It also depends how big a gambler we are or how important the beneficiaries are to us to decide how much we want to stake on our life.

Most of the time people underestimate rather than overestimate the insured amount not becos they can't afford but becos they have other priorities or rather no heart for the beneficiaries. They may have money to visit or call whore, money to drink, etc but no or not enough money to buy insurance.
 

garlic

Alfrescian (Inf)
Asset
#30
Term insurance is expense not liquid asset and I recall a quote was not that cheap too. Participating fund living policies are definitely not liquid, probably ten years or more to break even. I have that too so I know. Only buying index fund is liquid but no coverage. So as long as buying insurance means not liquid.
Not true, from 2nd year onwards, you can loan up to 80-95% of the cash balance of your participating life policies (depends on companies) and money reaches you within three working days, totally no need to terminate it. Hence, it is liquid, amount of loan you can take against the cash value of the policies depends on how much you have bought. On top of that, your living policies have coverage. Just dump the ILPs and spread it between funds and living policies.

One of my living policy from Income allows me to loan up to 95% of the cash value, while enjoying the coverage of $550k.
 

Engeng

Alfrescian
Loyal
#31
Not true, from 2nd year onwards, you can loan up to 80-95% of the cash balance of your participating life policies (depends on companies) and money reaches you within three working days, totally no need to terminate it. Hence, it is liquid, amount of loan you can take against the cash value of the policies depends on how much you have bought. On top of that, your living policies have coverage. Just dump the ILPs and spread it between funds and living policies.

One of my living policy from Income allows me to loan up to 95% of the cash value, while enjoying the coverage of $550k.
Yes you can take a loan based on the cash value of your policies just like you can take a mortgage on your property but that is not called liquid asset just like property is definitely not liquid. Not to mention the insurance loan interest rate is not that low at around 6% or so, much higher interest rate compared to mortgage.
 

garlic

Alfrescian (Inf)
Asset
#32
Yes you can take a loan based on the cash value of your policies just like you can take a mortgage on your property but that is not called liquid asset just like property is definitely not liquid. Not to mention the insurance loan interest rate is not that low at around 6% or so, much higher interest rate compared to mortgage.
"
Liquid versus fixed assets
Assets fall into two categories: liquid and fixed.

Liquid assets are assets that can be converted quickly and easily to cash without losing value. The most common liquid assets are checking and savings accounts, since you're able to withdraw your funds as needed. Emergency funds are often kept in savings or money market accounts for this reason.

Other liquid assets include life insurance policies that have a cash surrender value, savings bonds, and certificates of deposit without withdrawal penalties.

Fixed assets aren't as accessible as liquid assets because they're not easily convertible to cash. Fixed assets need to be sold, and a hurried sale could result in a loss. Examples of fixed assets include collections of art or antiques, jewelry, and real estate, such as your home."

https://www.statefarm.com/simple-insights/saving/assets-not-just-for-the-rich-and-famous

"Cash values are considered liquid assets because they are easily accessible at any time, usually with a phone call or fax to the insurance company requesting a "loan" or "withdrawal" from the policy. Most companies will transfer the money into the policy holder's bank account within a few days."

https://en.wikipedia.org/wiki/Whole_life_insurance

LIQUID ASSETS
Cash, or property immediately convertible to cash, such assecurities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable.

Although the ownership of real property is considered an asset, it is not a liquid asset because it cannot be readily converted into cash upon sale.

http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/liquid-assets

Mutual funds are also grouped into this category. In addition, the monetary value of an individual's life insurance policy is a liquid asset.

https://probate.laws.com/asset/liquid-assets


You seem to confuse liquidity with profitability...
 
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Engeng

Alfrescian
Loyal
#34
"
Liquid versus fixed assets
Assets fall into two categories: liquid and fixed.

Liquid assets are assets that can be converted quickly and easily to cash without losing value. The most common liquid assets are checking and savings accounts, since you're able to withdraw your funds as needed. Emergency funds are often kept in savings or money market accounts for this reason.

Other liquid assets include life insurance policies that have a cash surrender value, savings bonds, and certificates of deposit without withdrawal penalties.

Fixed assets aren't as accessible as liquid assets because they're not easily convertible to cash. Fixed assets need to be sold, and a hurried sale could result in a loss. Examples of fixed assets include collections of art or antiques, jewelry, and real estate, such as your home."

https://www.statefarm.com/simple-insights/saving/assets-not-just-for-the-rich-and-famous

"Cash values are considered liquid assets because they are easily accessible at any time, usually with a phone call or fax to the insurance company requesting a "loan" or "withdrawal" from the policy. Most companies will transfer the money into the policy holder's bank account within a few days."

https://en.wikipedia.org/wiki/Whole_life_insurance

LIQUID ASSETS
Cash, or property immediately convertible to cash, such assecurities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable.

Although the ownership of real property is considered an asset, it is not a liquid asset because it cannot be readily converted into cash upon sale.

http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/liquid-assets

Mutual funds are also grouped into this category. In addition, the monetary value of an individual's life insurance policy is a liquid asset.

https://probate.laws.com/asset/liquid-assets


You seem to confuse liquidity with profitability...
You are coming from the point of accounting or legal but I am not. It's quite clear to me that liquid assets means you must be able to liquidate quickly without taking a big loss and taking loan paying interest rate for it does not count. In fact, your quoted text said exactly that:

"Liquid assets are assets that can be converted quickly and easily to cash without losing value. "

And property is of course a fixed asset in accounting. But it is definitely not liquid when you can also take a loan on it by pledging your fully paid property to get a mortgage. So if can take loan means can classify as liquid asset then you should consider property as liquid too.
 

Engeng

Alfrescian
Loyal
#35
Indeed.....lol....
You are obviously making allusion here. Anyway it is ok lah I never claim to be good in accounting or legal or whatever profession or even interested in it. I only claimed to be good in clearing shit in clear shit jobs and that's my specialty indeed as proven by the results.
 

garlic

Alfrescian (Inf)
Asset
#36
You are coming from the point of accounting or legal but I am not. It's quite clear to me that liquid assets means you must be able to liquidate quickly without taking a big loss and taking loan paying interest rate for it does not count. In fact, your quoted text said exactly that:

"Liquid assets are assets that can be converted quickly and easily to cash without losing value. "

And property is of course a fixed asset in accounting. But it is definitely not liquid when you can also take a loan on it by pledging your fully paid property to get a mortgage. So if can take loan means can classify as liquid asset then you should consider property as liquid too.
I did not say if anything that can be taken a loan against it is considered liquid.

Regarding liquidity of life policies, i believe i already shared many articles that state why life policies are liquid, just too bad you do not understand or chose to not admit it. Please do the same that state life policies are not liquid and please only quote reputable, published sources.
 

garlic

Alfrescian (Inf)
Asset
#37
You are obviously making allusion here. How you know I am a graduate? I never announce before. Proof of theft again. Anyway it is ok lah I never claim to good in accounting or legal or whatever profession or even interested in it. I only claimed to be good in clearing shit in clear shit job and that's my specialty.
Errm...didn't know i was referring to you...
 

Engeng

Alfrescian
Loyal
#38
I did not say if anything that can be taken a loan against it is considered liquid.

Regarding liquidity of life policies, i believe i already shared many articles that state why life policies are liquid, just too bad you do not understand or chose to not admit it. Please do the same that state life policies are not liquid and please only quote reputable, published sources.
This statement that I quoted is exactly from your quoted text in your post. So is it reputable and published source?

"Liquid assets are assets that can be converted quickly and easily to cash without losing value. "

Anyway you do not understand or choose not to admit you can't sell your life insurance without making a big loss for ten years or more and insisting it's a liquid asset just because people say so without thinking yourself whether it is true.

If can take a loan means liquid asset then you should consider property not a fixed asset but liquid asset too. That's all I am saying.
 

garlic

Alfrescian (Inf)
Asset
#40
This statement that I quoted is exactly from your quoted text in your post. So is it reputable and published source?

"Liquid assets are assets that can be converted quickly and easily to cash without losing value. "

Anyway you do not understand or choose not to admit you can't sell your life insurance without making a big loss for ten years or more and insisting it's a liquid asset just because people say so without thinking yourself whether it is true.

If can take a loan means liquid asset then you should consider property not a fixed asset but liquid asset too. That's all I am saying.
The ignorance is shocking it must be nice to live in your world where quoting sources in a healthy debate is not a requirement..Tomorrow, go out and speak to your friends, tell them that living policies are illiquid. You brought the property argument in yourself and not once i say able to take loan = liquid. I meant the ability to take a loan against your policy, makes terminating one (liquidating) for cash unnecessary since you say terminating yours loses money, terminating mine certainly does not! Not every terminated policy loses money.

And i reiterate, liquidity and profitability are two different things. If you buy 1000 S&P500 etf at $230 and you sell at $210, taking a loss, then ETFs are illiquid according to you. Selling and terminating both will take the same time to end up as cash in your bank. easily done and fast, therefore it is liquid in every sense of the word, whether it is profitable is another thing.

Go ahead, talk and convince people without quoting sources and expect people to take your words at face value, tell them wikipedia is wrong and you are right just because you say so. Still waiting for quoted sources and published articles that say "living policies are NOT liquid assets".. till then, i rest my case.


 
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