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My 23 Insurance Philosophy (revised after reflecting on the past 10 years )

Have you wonder if you planned something out, whether you are doing things the right way?

12 years ago, I had the idea how I could plan my insurance protection by doing it myself.

I executed it.

There were not much resources then in Singapore and the traditional way was to listen and buy what your insurance adviser recommended.

These days, readers like yourself are more aware on the different forms of insurance. There are insurance resources out there. This makes DIY Planning easier.

Over the years,  I met with more planners, seen more cases studies, did more numbers and I realize I was wrong about some things and right about others.

Insurance is an important aspect of our lives and more people spend less time to think about it then they should.

Not planning it well causes possibly future heartaches and also on going heartaches.

This post shares with you what I learn along the way, how my philosophy and plans have shifted, and going forward. I will be covering:

  1. who influence my thought process in this area
  2. my current insurance protection plan
  3. what is a personal risk register
  4. balance between spending a lot versus spending little
  5. thoughts on disability income, early and late critical illness, term life versus whole life
  6. using insurance to hedge against overseas death taxes in investment
  7. the economic bias of advisers
  8. good advisers who I trust and work with

The takeaway for you is to invoke thoughts which leads to actions if you realize you don’t have a philosophy, don’t have a plan, have no idea about your plan.

My Influences on Insurance Protection

Throughout the past 14 years when I was first introduce to insurance, my idea about insurance is influence by various sources.

In 2002 to 2003, the web worked very differently from now. Searching is not so straight forward and insurance for Singaporeans is still a very niche subject.

Without knowledge and guidance, I have no idea how to search. It is a very different world from today, where you could just put in “What insurance should I get?” and you have a list of resources to get you started.

I am thankful that my earliest influences was from the sources that got me started in wealth building. It was a forum born out of Fundsupermart. While we discussed unit trusts, asset allocation and general investing, we also have the flexibility to discuss on insurance. We have some experienced financial advisers that were commission based dispensing and debating on insurance stuff.

As people new to this, it is invaluable to be able to interact with them, and for them to be unselfish with the knowledge they have.

I have about 4 insurance advisers along the way. Sadly, I did not learn much from them.

The first adviser came to our army unit to talk about insurance. He is more of a relationship builder, and at various time, never failed to highlight how many hours of product training he undergoes, and how his company is much better and secured than other insurance company (I still remember that insurer’s parents being one of those embroiled badly in the Great Financial Crisis).

I got a personal accident and a 43 year level term insurance from him.

I decided to work with an independent financial adviser (IFA) introduced by my ex-colleague. This was when I thought I was “rather savvy” about things. I wanted to believe working with a commissioned based IFA was the way to go.

However, she turned out to be another relationship focused adviser. Her company practice the model where the IFA focus on the relationship, while the insurance product manager recommends the best product out of the rest. In a way it is a good thing, I was rather versed in the simple insurance concepts.

I got a $50,000, 20 year limited whole life, $100,000 level term life insurance, disability income from her

My next 2 agents came about, because the IFA left, then the one taking over left and then the final one is the one that I am left with.

It was the first time I realize adviser turned over was a real thing.

As the internet grew, for someone who prefers to do my own research, the resources on insurances increases. I was able to tap from:

  1. Hardwarezone Forums
  2. Insurance company portals
  3. Blogs from insurance advisers
  4. Interactions with insurance advisers through social mediums

I realize that you cannot fully understand insurance, without understand the wealth building maths as well, since a lot of the products sold masquerade as wealth building products.

Eventually, the picture of insurance I formed can be condensed to a Free Ebook provided by MoneyOwl. I took the long path, but I think for you guys and gals, you have an easy time.

Some Disclaimers

How you should use this article is read it to get a feel of how I look at things.

I am not an insurance adviser, or certified to dispense advise tailored to you. Your situation could be very different from me.

And as you will read, much of it is not just about what insurance products to recommend.

I do encourage critical thinking in how you approach life, and thus read this and challenge my views, leave a comment if you think I am horribly misinformed, or that you do agree but have a different perspective.

My Current Plan and My Evaluation

My coverage is as follows:

  • Health Insurance: A private shield plan that allows me to be warded to private hospital and a rider that assures me the 10% co-insurance. I would still need to pay the deductible
  • Disability Income: 2 different Disability Income that together assures me 60% of my last drawn pay
  • Critical Illness: A combination of plans but should assure me in $350,000 late stage CI up to 65 years old. I have a limited whole life which should assure me $50,000 + accumulated cash value after 65 years old
  • Death TPD: Bundle together with critical illness, I should be covered around $450,000 in this area. The problem have been there is an overlap with critical illness
  • Personal Accident:  A newly mint MINDEF Group insurance

The total yearly premium is $3,660/yr or $305/mth. This is less than 8% of my take home disposable income.

Here is what I thought or did right and not very correct.


  1. I was right that we can divide the expense needs of the dependents then reconstruct them to come up with a figure required for life insurance. This would be a more specific amount then what the advisers recommend which is X times your annual income
  2. Health insurance and disability income are the important foundation
  3. Insurance is fluid. It does not mean once you buy, things stop there. When life changes your insurance needs will step up and step down
  4. As your net worth increases, think of whether the dependents can have access to them. If they could, your sum assured needs will continue to go down


  1. I didn’t know the purpose of critical illness and death,TPD  is different, and that it is best not to have overlap. E.g if you need 500k in death coverage and 250k in CI coverage, don’t have 500k death with a 250k accelerated rider attached to it. By the time I understood this, fortunately my net worth have grown such that the risk becomes less
  2. There is a big role for whole life. I always thought that insurance company cannot sell something this useless. There must be some role for it. The only role I see its benefits is in a life long critical illness plan that last beyond 65 years old to take care of out of pocket expenses
  3. Should not focus so much on insurance, but also preventive wellness care
  4. Health insurance looks more important than I think it is

The Main Philosophies

My experiences have lead me to come up with the following rule of thumb when looking at insurance.

Based on my influences, these rule of thumb do change when I realize I have made mistakes, or someone pointed out some scenarios that I failed to take into consideration previously.

These philosophies tend to be short, and I would expand on them in the future, or I will point them to resources in the past on these areas

1. Having an Overall Protection Strategy is More Important than the Parts itself

It used to be in the past that when we talk about buying insurance, what we have in mind is an insurance plan that pays out for any kind of risks we faced.

And it has to have cash values.

We got more educated and more people now realize there is no single insurance that covers all the risks we faced.

The able above is taken from the MoneyOwl Insurance E-Book.

The insurance protection products are to address a particular needs. So there is no one size fits all.

Thus, when we need to address many needs, we need not just one protection product.

At the end of the day, you need to pull yourself back, and ask the question: Have you covered the areas that impacts you the most?

2. Insurance Protection is the same as Risk Management at Work. Come out with your own Personal Risk Register

When we are buying insurance, we are attempting to hedge the health and wellness risks we face in our lives, at various stages.

It is similar to what many risks managers do at work.

In project management, we come up with a risk register.

insurance protection personal risk register

A Personal Risk Register

The table above shows a personal risk register that we can come up with for ourselves. There is the risks we faced in life, the probability of the event happening, its impact to our lives and what can we do about it.

For the uninitiated, it will be difficult to come up with this because

  • You do not know the risk that you will face
  • What are the mitigating solutions
  • What is the probability and impact

This is why we engage a financial planner to define the risks for us.

I think we could at least define these risks ourselves. You would at times face these fear, the difficulty is to articulate them out.

The reward of coming up with this Personal Risk Register is that it makes you realise risks are real, and whether you have a solution or mitigating action for it already.

If you have not, perhaps it is time to find how to alleviate these concerns or talk to a subject matter expert.

3. Everyone’s Probability, Impact and Mitigating Actions in their Personal Risk Register will be Different

We will all start off looking for a rule of thumb, such as what is the probability of a health event stopping us from working in our employed field and its impact.

That is all well and good.

What I realize is that over time, the probability and impact of events differ because we each lived very different lives.

We need help at the start to be aware of what the triggering conditions for the health or life risk are, and according to the subject matter experts the risks and the impact.

However, you do have to open up a conversation to discuss whether this is applicable for you, and at various stage of your life.

One example is that my risk for item number 1 on the risk register above, death of the income earner and the family missing his income.

I could put it as low risk, but that is because of my circumstances as a single and the age of my parents. The monetary impact will be different as well. If you have a family or build up less wealth, the impact could be far larger.

4. Mitigating Actions need not be based on buying an Insurance product

We have been doing risk mitigation without insurance for a long time.

It Is perhaps we are not aware we are doing it.

From our risk register above, some of the mitigating actions involve money, but not an insurance company paying for you but your family saving up yourself.

There are also risks that, the only mitigating actions is non-insurance based, such as building up an emergency fund, or building up wealth in the event you need something to supplement your income.

You cannot buy insurance to mitigate the risk that your child becomes a contingent liability.

5. It is a Balancing Act between Very Well Covered and Self Insuring

Some of my friends are very proud that their insurance pays every single cent of their recent hospital trip.

you could claim everything or you could pay everything. Or you could choose somewhere in the middle

Insurance is such that if the probability of claim is high, its impact is high, the premiums that you pay will tend to be high as well.

This usually fits those people where the underwriters determine you are a high risk case and thus your premiums are not low (older folks, those folks with pre-existing conditions)

If you really do not wish for out of pocket costs, then you pay for more riders that are appended to your plans.

My feeling is that, when you are unsure about what you are protecting against, you tend to pay more insurance premiums.

Optimizing your insurance expense involves knowing what you want.

6. What is a Responsible Decision you should make?

We all have limited resources, and hence we try to balance our financial and spending goals with insurance protection.

Continuing our previous point on how much insurance protection to acquire, the question you should ask is: What would be the responsible thing to do?

Often the responsible thing is to:

  1. Take ownership and understand what is required and what is out there to protect
  2. Balance your budget so either you hedge the risk yourself, purchase insurance or do both

Taking ownership and being responsible means in this cash understand the scenarios that could happen and the impact to your life. It is also about what other goals you have and how can you come up with a plan to move forward on multiple fronts.

Sometimes the responsible thing is also to admit you have too many other goals (not related to protection) and that you need to scale down. This could free up the cash flow to protect your family adequately.

7. Mitigate the Health and Wellness Risks instead of Pushing the Full Responsibility to Insurance (Using Money to Settle the Problem)

When I was young, and rather into this subject, I would try to find what is the most fool proof plan.

I frame insurance as a topic to be optimise and important part of my world.

As I grew older, I realize that doing that is good, but the focus is very wrong.

We should hope that we would not need to claim insurance. If we need to then something is not right.

Insurance focus the problem and solution on the money, when the problem and solution could be intangible in nature.

If I were to claim $500,000 in late stage critical illness but I survive with quality of life severely affected, my insurance strategy works, but what do I gained out of this?

The focus on the money side blinds us to the fact that we should do our part in taking care of our health and wellness.

Proper body, mental maintenance, not subjecting the body to excessive physical, mental stress, not pushing the body to decadence can go a long way to minimize these risk events from happening.

We cannot always win with these health and wellness prevention due to genetics, but at least we acknowledge that we do have a role to play in these risk mitigation.

8. The more complex the insurance product the more likely they tend to have higher costs

When you build in more flexibility into products (investment linked policies, universal life, 3 generation plans), there tends to be additional costs layered onto them.

If minimizing costs is what you seek to do (which most are) yet achieve the same protection goals, then it is important to understand what you purchase, and go for the more straight forward generic products.

9. Hedge the High Impact and High Probability Risks above All Else

What will impact our lives the most are the events that happen the most frequently and those that will result in us needing a large sum of money.

With this regard, I tend to feel the following are areas you should get good cover:

  1. Health Insurance or Your H&S Shield Plans. You do not know when you will be admitted to hospital, and that whether high or low impact, you will need this. It is a good thing we are automatically enrolled into Medishield Life which is a health insurance
  2. Disability Income. Your income from work is the most valuable to your family as well as yourself. If your family loses this, the cash flow takes a severe hit, for many years. From this point of view, the disability income becomes the most important
  3. Emergency Fund. This is not an insurance but for most people, they have no idea where the financial shocks will occur and its impact. A lot of insurance reimbursement requires you to pay first as well. Where are you going to find the money? If you live in uncertainty, it is paramount that you have a self-insurance such as this. (Here is my comprehensive guide on Emergency Fund)

I am not saying the rest are not important. For some the rest could be more important. However, for most people I find it hard to argue against these.

And the out of pocket insurance outlay here is only for #2.

10. Life Insurance takes up such a large focus …. perhaps a little too much

Here, we are talking about term life insurance, whole life insurance, limited whole life insurance and the new hybrid of life insurance.

We even have a debate of term life versus whole life for the longest time, primarily because of the difference in premiums and the approach we should take.

Perhaps we spend too much time on this then we should.

We failed to realize the impact of this risk is not felt by us, but by those around us.

Once the event is triggered, we are no longer here.

However, there are alternatives to make up for that loss in income for a vital bread winner:

  1.  The spouse could remarry
  2. Some family are rich enough for the surviving spouse to get back dig in and carry on with life
  3. When your children is older, they could be able to supplement the family income. That is how many less well-off family do, when the main bread winner do not earn enough

The idea here is that it is not unimportant but is less important then what society makes out to be.

The saving grace is that it is not overly expensive before age 65.

A level term of $500,000 coverage can be purchase for $800/yr in annual premiums.

11. Life Insurance is a Show of Love for the Spouse and your Family

Having said that, the life insurance is one of the greatest gift, yet it is the least glamorous.

It doesn’t evoke positive emotions from your loved ones, because most do not know the repercussions when it is missing in your life!

However, for those who understands it, you should cherish it when your spouse bothers to plan for the time if they are not around, so that you do not have to suffer alone and go through the 3 alternatives I listed above.

It is the gift for the pragmatic people.

12. Term Life Insurance versus Whole Life Insurance – My Take

This has been argue a lot between people.

To me term insurance is treating insurance as an expense and that you only need it till 65 years old.

After 65 years old, the assumption is that you do not have any more dependence on your income, and therefore you do not need the death insurance.

Whole Life is made up of a cash value and term insurance.

If you buy term life insurance, the difference in premiums you pay for a whole life versus term, you need to invest, build wealth with it.

If we look at insuring the assured to age 100 or 120 years old, whole life insurance and buy term and invest the rest is the same.

For term insurance the premium will be much higher after 65 years old, and after 65, a lot of the payout from insurance will be paid out from you investing the rest of the money. Compare this to a whole life paying out from the insurance policy.

There is little difference. When you buy a whole life insurance, you transfer the saving and investing risk to the insurance company. When you choose to buy term life insurance and invest the rest, you are taking on the saving and investing risk.

In my mathematical modelling, the payout of a whole life insurance policy at 100 and 120 years old is roughly similar to that of buy term and invest the rest.

There is only one period of difference, and that is just after 65 years old, where whole life insurance have a good payout and that the invest portion of the buy term and invest the rest plan have not “matured” enough.

13. Health Insurance or Shield Plans Seem to Bear a Large Part of the Brunt

How does Singapore health insurance or integrated shield plan work?

As I grow older, and seen more claims cases, I seem to have the idea that for many of the triggering health events, the health insurance seem to have bear a large part of the brunt.

Here we are being sold that we need life insurance, critical illness, early critical illness and personal accidents.

However, the common link amongst them is that, whichever of these plans, they are less of an importance to health insurance as a lot of the claims will be taken off by health insurance.

Those plans become very supplementary and no doubt having them will better alleviate the problem.

This means that if you are limited in your budget, taking care of your health insurance is important and an important cost to bear, BEFORE we talked about the other plans.

It would mean that for the extremely poor, the consequence of the rest of those insurance is less. Knowing this may help them from overstretching their budget on insurance.

14. Self-Insuring can be Expensive Relative to Insurance

A health insurance rider might cost $120 per year and it covers your deductible or co-insurance.

To self-insure, you have to possibly save up $3000-$4000 to pay the deductible and co-insurance yourself.

That $3000 can pay for 25 years of the rider’s premium, which will remove the deductible or co-insurance. This is hard to beat.

However, insurance costs are going up and at older age, the cost of health insurance rider might not be as lucrative

15. Return Projections tend to be Too Optimistic

From my experience tabulating insurance endowment returns, what the insurance company projected at the start to get you to buy the policies tend to be over optimistic.

The rate of return used by whole life plans, endowment savings plan have been revised downwards over the years.

This coincide with lower bond yields, which lead to lower participating fund returns (the fund where the whole life policy and endowment gets their return from. The funds tend to invest in bonds)

16. Don’t Mixed Wealth Building and Insurance Protection!

One common area I have to help friends and family members untangle is when they purchase complex products.

Advisers like to sell you complex products and somehow, they tend to fetch the best commission for them.

The problem for you is, your adviser is not going to tell you which policies are for insurance protection and which is for wealth building.

There are many friends who assume that the whole life policy with cash value is for wealth building.

So the question is: At 65 years old are you going to cancel that policy to get the cash value? They often have no idea.

As much of these decisions are delegated to the adviser or an imaginary friend of theirs (that only happen in their mind in moments), they couldn’t figure this out.

So when I ask the question: How strong is your wealth machines at this point, they tend to omit all insurance like policies and say they don’t have much.

It can be rather frustrating to people trying to help them.

Since these complex products do cost more and is a planning nightmare, it might make sense to get generic insurance protection and generic investment financial assets.

Make them easy to be separated.

If not, tag which insurance policy is for protection and which is for wealth building. I have a recent reader who was able to do this on his own. Very impressed by him to be able to do that.

17. Is Insurance Premium a Survival Expense or a Rich Life Expense?

Figuring out the nature of your expense is one of the important steps to figuring out how to build financial security into your life.

It enables you to build wealth machine(s) that can pay out a wealth cash flow to supplement your income, or pay for your survival expenses when you lose your job, or transit to another job.

It is very subjective whether your insurance premium is a survival or merely meant for a rich life.

My take is that some are and some are not.

I find some insurance as vital, such as the health insurance, disability income listed above. The expense in this area is vital for survival.

The rest are rich life.

I heard of many stories through my working life of how unemployment made my friend or relative’s father stop paying for their insurance and it comes back to haunt them.

For the reasons, I stated above, things are not so catastrophic.

The mitigating plan is to ask yourself the question: How much of life insurance, critical illness and personal accident do I absolutely have to keep?

The answer may be 30%, 50% or 75%.

You would essentially have a survival insurance and rich life insurance. You have to find that middle ground.

You might also want to set a rule that the insurance decision be one of the last to be triggered.

18. Life Insurance can be used to Mitigate the risk of Overseas Death Tax or Estate Duty

When you invest in overseas market, there is a risk that if the investor passes away, and the country have some form of death tax, a large part of wealth you build up may not go to your loved ones.

Popular markets such as USA and UK both have it.

Investors like this region for their exciting and vibrant markets but also they have better and more liquid exchange traded funds.

USA have estate duty of 50% tax above US$60,000. UK have an inheritance tax of 40% above 325,000 pounds if you do not leave it for your spouse.

The tax is hefty.

The mitigating solution can be purchasing term life insurance to provide the dependents of this 40-50% of your current (or future) portfolio value.

If your portfolio is US$500,000 and a tax will shave off SG$350,000, the cost of insurance could be SG$350/yr. This works out to 0.046% of your US$500k portfolio value.

You are treating the cost of assuring against these overseas investment risk as an expense.

This insurance would need to be evaluated together with your wealth building and less so on your overall protection strategy.

19. Premium Waivers are Good to Haves….

Some insurance policies such as insurance endowments, whole life plans, investment linked policies and retirement plans have an additional rider called premium waiver.

The premiums look very small compared to the main policy premium, but the premium waiver can be rather useful.

Should the assured suffer from a risk event for the policy and eligible for claim, the assured do not have to pay subsequent premiums.

Premium waiver is like an insurance on the premium payment.

Premium waiver riders can be useful if they are applied on the policies mentioned above. It assures you that in the event of the trigger, you do not have to worry that due to your health issues, these savings plans and retirement plans do not get funded.

Not all premium waiver would work well because a few policy’s triggered event can only take place when the assured is not around, or have fully claimed all the cash value.

You can read more of my in-depth article on Premium Waiver here > 

20. It is good to have a portion of Critical Illness cover for Life, and Separate from your Life Insurance

Critical Illness (CI) remains one of the expensive component in insurance protection.

It allows the assured to claim a lump sum if the assured suffers from one of the 30 defined critical illness. Since I started working, this definition have expanded to 37 types of critical illness. Different insurance companies might have additional coverage for specific aliments.

The objective of the CI is to replace 3 to 5 year of your annual income as well as provide a lump sum for alternative treatment or other forms of care.

I always have a suspect that, much of the magnitude of treatment cost will be borne by the health insurance, or the integrated shield plans.

My experience with a loved one proves that this is correct.

I also think that if we were to alleviate 3 to 5 years of cash flow, the disability income could be more appropriate.

Still, critical illness plan is vital because nowadays, many people depend on supplements and alternative treatment which are less abrasive than standard treatment.

These alternative treatments are not cheap.

A lump sum would prove useful to alleviate such challenges and aid the recovery. We should also note that there is a waiting period of 30,60 or 90 days typically for disability income, so that lump sum from CI could prove useful (another solution is to have an emergency fund!)

The contentious debate is whether we should rely on term insurance till 65 years old or have a limited whole life till possibly 100 to 120 years old.

I lean closer to the idea that even after 65 years old, not having to pay out of cash should a CI event is trigger is very assuring.

The counter argument to this is that, by then, the value of the limited whole life policy would not be able to alleviate much of the costs as health care costs would have outpaced what you have purchase.

You can adopt the middle ground, as I have. I have a limited whole life insurance with CI cover for this. However, the assured amount is not the full $200,000 to $300,000 many require but $50,000. It doesn’t kill my cash flow but more of a good to have in that if I last more than 65 years old, I have a CI for life to resolved a small part of the costs.

When I started planning, I made a mistake of lumping death, TPD and critical illness together. If I am thinking of increasing my coverage, I have to increase all three.

It is only later in life, that I realize the purpose and coverage required for CI and death is very different. As such, I should not look at the three together but to have separate amount assured for death , TPD and CI.

The cost is also significantly different between CI and traditional term life insurance. Separating them could optimize your cost better.

Related10 things to think about on Insurance Coverage for Early Critical Illness

21. Decreasing Term Life Insurance is a Secret Sauce to Further Manage Cost

Term life insurance before the age of 65 years old is already rather cost effective. However, some folks might want to optimize further.

They could make use of a decreasing term life insurance.

What is the difference here?

In level term life insurance (which is the usual flavor), the coverage or sum assured stays constant throughout the duration. For example, if it is 200,000, the coverage stays constant.

For a decreasing term life insurance. the coverage gets lesser and lesser as the tenure nears its end.

Decreasing term life insurance fits the kind of assurance where the impact of your risks becomes smaller and smaller.

What are the examples of things like that?

The most common is your home. As you pay off your mortgage, the liabilities on the home you need to pay off becomes less and less.

HDB would want you to subscribe to a mortgage insurance called Home Protection Scheme, so likely you would have bought a decreasing term life insurance.

decreasing term insurance plans in Singapore

The table above shows some available decreasing term insurance. Note that not all of them can be purchase without a mortgage.

the cheapest term insurance plans in Singapore

In contrast, if you purchase a 25 year level term, the premiums you get is something like above.

Decreasing term life insurance is for folks who really want a very targeted form of protection:

  1. As your children become older they lessen the impact that should you not be around, they will be adversely affected
  2. As you build up your wealth machine, your dependents reliance on this lump sum is greatly reduced

Related: My thoughts on Decreasing Term Life Insurance

22. Disability Income is a Higher Impact Risk Event then Life Insurance

However, disability income is seldom sold because advisers do not earned as high of a commission.  Disability Income assures the person that, if the doctor assess he cannot perform at his profession earning the same level of pay, and have to step down to no pay or work in something that his pay is lower, the policy pays out the difference.

The tenure would last to as long as 65 years old.

For Most of us, our human capital or our ability to work is our greatest asset, yet it is something we do not assure against.

The premiums are very manageable for a salaried worker.

You can read my comprehensive guide to Disability Income here >

23. Take note of the Economic Incentives of Insurance Advisers

Advisers, need to put food on the table.

And due to that, they need a good system so that they can recommend the right products, provide good advice and be remunerated accordingly.

Unfortunately, the age old and prevalent commissioned based structure most advisers were paid under is challenging to fulfilled that.

They have a high incentive to push the products that gives the greatest commission.

They undervalue the advisory and the planning portion of things.

how much insurance adviser is paid term versus whole life versus hybrid

The table above is taken from MoneyOwl’s Insurance Ebook.

It shows how much you need to be adequately cover, if the adviser determines you need $500,000 in death/TPD coverage.  You have a choice to use term life insurance, whole life insurance, or a hybrid whole life (which is a whole life insurance + term life).

Notice how much more expensive is the premiums of the whole life and hybrid.

Over the lifetime, the adviser gets to earn 80-100% of at least 1 year worth of premium. There is greater incentive to sell a plan whose premium value is higher than one that is lower.

If the client has a limited budget, the adviser would likely recommend a whole life plan with LOWER coverage, over the term life insurance, due to the higher economic incentive of the whole life plan.

This result in the client to be under-insured. This is a very common sight.

When I meet with readers and friends who are well versed in insurance, their number one headache is to ask me to recommend them a reliable adviser.

This have been hard, but some years ago I went about screening for advisers that meet my criteria of

  1. integrity, and
  2. have been in the industry for long
  3. yet technical competent

One of them is Wilfred Ling, who is a fee based financial planner. He charges a package based on the niche area of planning you require such as

  1. special package for young children
  2. techniques to predict future returns
  3. estate planning for people with special needs
  4. generating passive income for retirement needs
  5. the right life and health insurance

Wilfred being fee based doesn’t get paid through commission but by giving you advice and figuring out the nuances of your current situation. There is a fee to it.

If you are interested to work with a reliable planner, you can sign up through here for buying the right life and health insurance, and generating passive income in retirement planning.

These are my affiliated links, and you get 50% OFF the consultation fees. This is a way to support Investment Moats as well.

23. Insurance is Meant to be Sold

Not many people would proactively plan for the own insurance protection, unless they actively seek to become a responsible adult. Or they were ‘triggered’ and seek to find the truth.

For most people, their decision to get insurance protection was due to experiences from loved ones.

Other than this, insurance protection is not a topic for the lunch time.

Therefore, good things need to be sold. Whether is you selling to your best friend, or your siblings, or advisers trying to sell to you.

Not selling sometimes, is not doing the prospective person a huge disservice because he or she might suffer from an event that had they bought some insurance protection, things would turned out better.


I am sure along the way, life as well as other thought leaders will change my perception on things.

I believe good advice comes from competent technical knowledge in the insurance protection field, but also experience to understand the real world and balancing things within the client’s constraints.

And you need to be persuasive to push good things to clients.

My thoughts of this over the past decade is that, if you put in effort you can figure out the nuances of insurance so that you become a more informed client.

This prevents you to a certain extent to purchase the wrong products, or be under-insured.

However, there is a place for good advisers as people still feel better with some hand holding.

Let me know your thoughts.


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Tuesday 27th of February 2024


I would like to see if you have any thoughts on this subject about whole life insurance. I have had a whole life policy for about 25 years. Generally, we are told at this point that we can either surrrender it and keep it running until death. By surrendering (if we do not require the insurance component any more), we will obviously get back a lot less that keeping until death. I understand their is a third option, which is to cash out accumulated reversionary bonus from the policy. What this does effectively to my understanding, is you are taking out your "non-guaranteed" portion on death of your policy but keep the "sum assured" of the exisiting policy. (this assumes you will continue with the premiums for policy until death). This based on my calculation and understanding will allow the policy holder to take some cash out (reducing the entire value of the policy), without being "penalized" like surrendering the policy.



Friday 1st of March 2024

HI K, I think firstly, we need to make sure that we need to be insured still. Perhaps the reason we bought that policy is to cover so that our dependents have that money in case we need it. Part of the bonus goes into the value which is needed. If you need the coverage and found no better way to cover it, then perhaps you should not surrender it. However, if you find that you do not need it already, you could do what you said but we should evaluate based the overall returns in terms of IRR (internal rate of return) versus where you would put the money next. That is how I see it.

paulina lee

Saturday 30th of May 2020

As of today, your views are still practical n wise. As a Financial planner myself, i do echo some of your views n opinion. that's why i always tell my clients the advantages n disadvantage of the plans and let them make a well inform decision.

One thing you might look into now is early stage CI.

warmest regards!


Sunday 31st of May 2020

Hi Paulina! Thanks for sharing your views. What is your thought process when it comes to early stage CI?


Tuesday 28th of March 2017

Hi, u mentioned that CI and TPD riders are not recommended as riders on death policies. Why is that so? I have a whole life policy with CI and TPD cover (tokio marine's dread disease rider). Would I be right to assume that as the total sum assured is fixed (e.g. Max of $300k), then the payouts upon death may not be sufficient for the original intent. E.g. If I claim under CI or TPD, say the company pays out 75% of the sum assured. Upon death only 25% will be left of the original sum assured? Thanks


Wednesday 29th of March 2017

Hi Derrick, perhaps I wasn't very clear. I see CI and Death coverage as 2 different purpose, or 2 different event triggers. There is a possibility that both events could stack on top of each other. The beneficiary of the CI is yourself, and your family. The Beneficiary of death is mostly your family. So its slightly different.

When I was younger, I was not illuminated to see things this way. So I tot if i have 500k of coverage for all three areas I should be fine.

So as I know better I realize the cost of CI is more, and perhaps i do not need until 500k. The cost of death coverage is less, and I could jack that part up.

Hope this helps.

Jasmin Lim

Sunday 5th of March 2017

Hi drizzt Very thorough sharing on your views towards insurance Thank you


Sunday 5th of March 2017

Hi Jasmin, thanks. You have been part of my growth as well.


Wednesday 1st of July 2015

Dear Kyith Ng ,

Very sorry that I forgotton under which heading did I read regarding your calculation of interest for insurance plan. So I just ask you under this heading I had 2 mature endowment plan

First one is from NTUC

Monthy payment is $48 Number of years is 25 Total amount at maturity is $22403.30

Second one from Great Eastern

Annunly payment is $632.3 Numberof years is 25 Total amount at maturity is $14842.16 + total cash back $5000 = $19842.16

May I know what is the interest rate am I getting from these 2 plans ?

What formula did you use to calculate or which compound interest calculator did you use from the internet ?

Thank you


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