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Actuaries don’t buy whole life insurance and ILPs

In fact, they don’t buy a lot of insurance!

Actuaries are well trained professionals who help insurance companies balance the risks of insurance product versus an effective value that consumers will be willing to pay for it.

Actuaries mathematically evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. – Wikipedia

So what do most actuaries buy to insure themselves?

An old article in Sunday Time’s interviews Christopher Tan, CEO of Providend:

“I asked an actuary (someone who designs insurance products) who had left an insurance company what he buys for himself. Like many former actuaries I have spoken to, he said he would never buy an investment-linked plan or a whole life plan as it is just too expensive and doesn’t make sense. He has protected his family with term plans. So, if the chef doesn’t eat his own cooking, why should we?

At the simple dollar, the blogger spoke of a conversation with his friend who became an actuary for a large life insurance company

He basically told me that if I am a financially sound person, I am throwing my money away on life insurance unless I meet a few strict criteria (young, a relatively low net worth, and young children). This kind of blew me away considering he’s in the life insurance business, but when he broke it down for me, it made a lot of sense. Note that the advice that follows is based on a conversation between friends and shouldn’t be viewed as professional advice and you shouldn’t just follow it blindly without doing your own research, but it is quite interesting and worth sharing.

  • unless you are a financial train wreck, you should never buy anything but term life insurance
  • if you have no dependents and no spouse, don’t buy life insurance
  • the more net worth you have, the less insurance you need
  • think about your family’s needs carefully
  • when your policy expires, don’t renew it immediately – recalculate

The people that systematically access risks through quantitative means questions the viability of expensive insurance, probably assessing that the probability to make a claim versus how much you pay for it isn’t worth it. Why then do we do the opposite most of the time?


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Thursday 11th of October 2012

To Carol:

Just to add on to Drizzt comments, yes NTUC is competitive, but it depends on what kind of policy you are looking for. You don't need to buy all your policies from 1 insurer.

A rider is good in the sense that it is of a lower cost compared to a standalone policy, take critical illness for example. However, do note that a rider MUST be tagged to a policy, and if you tag it to let's say an endowment policy, your rider will cease to exist when your endowment matures. And do take note of the wordings of the rider as well. If your critical illness rider only covers you to the age of 65, and you tag it to a whole life policy (99 yrs old), then your rider will 'expire' first. It is attachable to a term policy as well.

Lastly, do note that riders DO NOT have cash values, unlike traditional policies. All the best in finding a policy that suits you, Carol :)


Thursday 2nd of August 2012


can you advise which insurer is competitive, Ntuc?

what is rider? is it good?



Tuesday 7th of August 2012

NTUC is definitely competitive and so are tokio marine. A rider is a sort of a tie in to an original insurance policy to enhance the coverage. say your endowment savings have only death and tpd coverage, the agent recommends a critical illness rider to tagged to this policy.

there is no good or bad. note that the rider becomes risky when your main policy (the endowment) becomes risky as well. you lose the main policy you risk the rider

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