Friday 4 December 2015

I've gone naked! No more Life insurances!

I've just gone to my insurance company this afternoon and surrendered my remaining last whole life insurance. I ended my term life insurance policy 4 years ago when I returned back to Singapore.

Whole life insurance policies break even after 20 years. So had to patiently wait until today.

I bought this whole life policy just before my 28th birthday 20 years ago. Man! I'm now 48!?

Where did these 20 years go?

In case you forget, there's no estate duty in Singapore. If our net worth is several times the payout of our life insurance policies (doesn't matter term or whole life), pray tell why do we still need to have them?

The 2 main reasons we need to have life insurance when we are starting out in our careers are:

1) We have dependents we care about; and

2) our net worth are pretty dismal.

By buying life insurance, we create an instant "net worth" in the event of our early departure...

However, 2 things may happen to make our life policies redundant.

a) Our dependents have moved on - either through death, divorce, or acrimony.

b) Our net worth have caught up and now exceed the life insurance payouts. 

Ever wondered why we have millionaires that still need life insurance policies?

That's because they have insurance agents that can sell ice to Eskimos!


  1. Aiya. Like that I have dependents + my net worth is only a couple of thousand dollars probably (exclud. value of my humble HDB), guess I still need my insurance!

    1. Kevin,

      I had it easier as I only have mum - I'm dependent on her.

      Now my focus has moved on from the financial aspects to who can I trust to take care of her if I'm no longer around - her emotional, spiritual, and physical needs, etc.

      It's definitely not send her to JB with a "anything money can solve is not a problem" mindset!

  2. Lucky is just insurance naked.... hahaha :-)

    Life insurance can sometimes = life time commitment!

    Maybe health insurance is more nec before medishield. But Life definitely sounds more important, hence more sellable !!! So u c, I got life insurance but dun have "health" insurance other than medishield.

    This is how "snake" good the salesman are.

    1. Rolf,

      I wonder those who parrot Rich Dad Poor Dad will say about life insurances - an asset or liability? I mean its cash flow out every year, no?


      Medishield Life is perfectly OK just as long we are comfortable with B2 wards and some waiting. And no air-con. Can't choose doctor also.

      Which is not much different from my current HDB lifestyle. I queue like no nobody at the popular hawker stalls, eat with no air-con, and can't choose the cook or chef anyway!

      Luck plays a big part.

      Some people whole life smoke and drink yet healthy like ox. Some people watch what they eat and exercise still kenna debilitating illnesses...

      A bit of medical literacy can be good too.

      Since glaucoma can be hereditary, that means I have to add eye pressure tests to my annual medical checkups.

      Sometimes paying attention to what our bodies are telling us can be more important than health insurance.

      Of course one should not become a hypochondriac, but consulting our family doctor if there's a unusual lump, pain, or soreness early instead of ignoring or denial may mean the difference between early curable detection and late terminal stage detection...

      The premiums I saved from my life insurance policies can now go towards my annual medical checkups ;)

    2. Hi Jared,

      Totally agree to exchange premium out to annual med check up instead.

      Prior to medishield life, I went check up with AIA, prudential and NTUC attempting to buy health insur, but I failed all tests.

      I bought my first life insurance close to 25 yrs ago using my army salary, when the sales guy knock at my door. I know nothing about insurance and I was "on paper" v healthy. he offered me Life insurance ILP instead of "health/hospitalisation plans!

    3. Rolf,

      Life and health insurance make a lot of sense.

      Unfortunately, the problem lie with the compensation and incentive structure...

      If I now doing NS, the most priority insurance I can afford on NS men allowance will be Personal Accident.

      Look, if we are serving NS, we can't be medically unfit, so health and hospitalization not so critical since sick or injured there is "free" SAF medical hospital wards.

      What's more likely to happen is probably a training accident.

      But will any agent sell affordable Personal Accident policies to NS men?

      Commission is based on the size of the premium paid. If affordable to client means eat grass to agent.

      After NS, once we are earning a proper salary, we can explore term and hospital insurances.

      Medishield Life is great for people like you who are otherwise uninsurable. I personally think it's a good move by big daddy so all of us fellow Singaporeans can support one another.

      I'm not a big fan of the Scandinavian model where everything is "free"; Singapore's model encourage us to pay our own way - big daddy takes care of the basics; if we want the bells and whistles, we pay ourselves.


  3. Hi SMOL

    You sure you are naked now?

    How about your DPS? Credit cards/saving account/union/others' tagged along life insurance that came for "free"? You may still have a bit shade? haha. :)

    Good that you did so. I will be doing so too after 55 years old, which is to surrender all my policies. By then, my policies returns in the last few years after breakeven should be good. Since you already breakeven, why not wait a few years? I think it got 4-5% returns after breakeven for few good companies (not all).

    1. Frugal Daddy,

      Well, I'm pretty sure I am naked underneath my clothes ;)

      I'm talking about Life policies.

      Of course I have other insurance policies. Some are mandatory by law.

      "Breakeven" is an insurance lingo. If you have a whole life policy go look at the benefits illustration for that 20th year waterline.

      When I bought this whole life policy, the yield was around 6.5%. Now it has dropped to 3.75%

      Technically the money I've collected is more than the premiums I've paid for the past 20 years, but I wouldn't want to call it a "profit" especially when I inflation adjust it ;)

      Whole life is forced savings. Good if we are the type that got some money in savings account must spend!

      Two reasons why I've cashed in my whole-life now:

      1) As I've blogged in this post - it has out-lived its original purpose.

      2) This lump sum cash will add nicely to my opportunity fund for 2016 - again good timing I think!

      My track record says I am doing better than this 3.75% yield I'm getting.

      So its DIY asset management since I'm doing it full time now ;)

  4. Hi SMOL,

    Great that you have reached another milestone event - the cancellation of unnecessary insurance! It'll be a great sum of money to use :)

    I've 2 wholelifes, one of which is pay until I drop type. I'll probably drop that one when I don't need it and it breaks even. The sum is insignificant to me, even now. The other one I can convert to an annuity for retirement :)

    1. LP,


      Sometimes we see people go round in circles chasing their own tails trying to figure which type of insurance is "better" when the first question they should be asking is - do I need it?

      Good to have is not the same as must have ;)

      On the other end of the scale, if we have more children and/or multiple marriages, increasing our coverage may be necessary as there will be lots of claimants to your estate!

  5. I have surrendered my life insurance sometimes ago. Welcome to the "Naked Club". Maybe can join the audition at LOL

    1. Sanye bro,

      It's nice to know I'm in good company ;)

      Maybe I can go ask NAFA if they need male mature models with paunch who are willing to post naked?

      Hey! I'll do anything for a drink!


  6. that means i had been naked for many years already.

    1. i never tired of hearing "i surrender or cut when i broke even".

      i had a friend who own noble but refuse to cut becos he is losing money, even thought he thinks that the stock might go to zero! what a xxx!

      this is a death trap my friend!

    2. as a trader you must know once you think is a losing trade or even bad investment, or even a wrong decision, you must throw in the towel, fast!

    3. i never gives advise but i ask him, "if you think its going lower, why not cut it off? is it difficult?"

      "no la, already sink so deep, pointless to cut!" was the reply.....

    4. coconut,

      And your neighbours never call the police?

      You must either have a great body or living at a nudist compound ;)

      I know. I was like that once but lucky I realized my failed logic... Now I embrace risk and money management.

      That's why trading and investing can be very revealing to who we really are - intellectually and emotionally speaking.

      In retail investing its far worse. Because of the this "long term investing" excuse, many are sitting on losses and hoping one day they can break-even.

      If only they can hear themselves speak. Where got people invest just to break-even?

      Like that might as well leave money in fixed deposits or CPF!

      Yet these are probably the same people who "advise" others to buy term and invest the rest...

  7. Haha was your last paragraph your own opinion? Or did you actually poll and talked to millionaires?

    1. SMK,

      Anecdotal evidence - judging by the many million-dollar-round-table agents that were "congratulated" by their insurance companies through full-page advertisements ;)


  8. It works both ways. Lol

    Firstly they tend to use anecdotal evidence incorrectly which you attempted here. And on top of that, there is no clear linkage between you example of newspaper awards publishing and the source of their sales being millionaires. Lol

    I would not cite berkshire hathaway as anecdoctal evidence of buying a fabric company to get rich. It does not qualify as being anecdotal. There is no obvious causal linkage.

    Secondly, I think we might be giving agents too much credit if all millionaires are eskimos being sold ice. The millionaires I know tend to be more discerning being self made millionaires. Maybe the rest of the millionaires I don't know are more trusting?

    1. SMK,

      Just like using anecdotal evidence of a few "successful" bloggers (be it investors or traders) to extrapolate that financial freedom can be achieved by everyone and anyone ;)

      The empirical evidence is the majority lose money "investing".

      On hindsight, these "investors" would be better off with whole life insurance, never mind the high commissions involved.

      Millionaires are people, just as poor people are just as prone to buying things they don't need too ;)

      As ex-salesman, let's just say I'm biased. Anyone can be sold to just as long we find out which buttons to press.

      A plastic Casio watch can tell time just as good as a Rolex.

      Rolex is not in the time keeping business ;)

    2. Agreed fully. :)

      Just not agreeing on the original second last paragraph of article. (I realised it should be 2nd last paragraph not last paragraph. My mistake.)

    3. SMK,

      It has been a fun and intellectually stimulating discussion!


  9. I heard about a company who sell their brand as the guru stock investing to attract the public. But actually they earn their fortune from property, which is kept super low profile!

    Seems like stock guru is the more sexy figure. Whether or not u truly earn money from it, is not the focus. As long as u pretend to be. That's what people want to hear.

    As long as u say things that people want to hear!

    1. Rolf,

      I hear you.

      Selling dreams is a very lucrative enterprise ;)


      We are the silly ones who rolled-up our sleeves and make our own dreams come true.

  10. the smarter company is now selling education in value investing knowledge and then selling them shares in their education company and then selling the price increase in their listed shares as increases in value of individual share (don't mistaken market cap as increase in value of share, and they were selling value investing courses! the irony!) and then marking up the value of a company, buying it and selling it double the price away again to another company in exchange for shares of the 2nd company and repeating the same procedure with the 2nd company.

    lol oh the irony! the genius! and blindfolding of the customers!

    can you guess which company? probably some of your friends have bought in. lol and some of them will stand to benefit by exiting in time.

  11. Deception in the name of God - we know who.

    Deception in the name of Graham and Buffett! haha...

    1. Just drop names and masquerade yourself to be acolytes of the great and mighty.

      Wear sheep clothes and conceal your fangs and claws.

      When its wool these false prophets are after its not so bad; it's when they are after lamb chops that's when things start to get hairy...

  12. I just surrendered 2 policy. My 12 year term life & money back before break even. Very heart pain also see only get half of what i pay... sigh

    1. sy sy,

      See as it this way - you don't want to "collect" on your 2 insurance policies, do you?

      It's good to have no more need for Life insurance - our dependents can either take care of themselves, or our networths have exceeeded the policy amounts.

      Either way its good!

    2. Hi smol

      Thanks for reply me. :)
      I also dont know is it good or no good. During young time thought forcing myself to save. As i dont know how to invest in stock market the only thing i invest is unit trust fund thru fundsupermart.
      Recently get to understand more about cpf sa thinking to use the monthly insurance to top up my sa to get 4% is better than save in insurance. Maybe i am wrong... sigh... is ok lah. Already surrender liao...
      My net worth not even 100k already so old liao how to retire? Have to trust cpf lor... "cross finger"... ;)
      I still have a group term life insurance & critical illness. So havent really naked like u... hehehe


    3. sy sy,

      Ah! You are climbing up the mountain; not climbing down the mountain like CW and me ;)

      Normally, as we get older, our need for Life insurance grows less and less.

      Life insurance is bought for our DEPENDENTS. If we have no dependents (or they can take care of themselves), we don't need Life insurance. Period.

      I see you asking Eldershield at CW. Eldershiled, hospital plans, critical illnesss, etc - these are "inusrances" for OURSELVES.

      Its based on the prinpple of if we can take care of ourselves, our children can take care of themselves without us holding them back.

      If you have no interest or new at investing, CPF is not so bad, especially if you can easily hit the FRS hurdle.

      But go slow if you haven't even hit the BRS now... We can only withdraw excess CPF money beyond BRS or FRS at 55. If not, you money will be stuck with big daddy forever and ever insdie CPF Life...

      Free ask CW out for kopi. I debate with him a lot. His track record good for mature new "investors" like you.

      If now you in your 20s or 30s, and you voluntarily add to CPF, I'll give you a poke and maybe a kick!

      CPF is great as a savings vehicle for the SAVE more tribe; lousy if we want to be competent in the EARN more camp.

    4. Hi hi

      Thank you for ur advise.
      I already make a lot mistake, now already old liao... can not make anymore mistake liao... thats why stress about all this insurance, eldershield... sigh
      Already make appoitment with brother cw8888. Really appreciate that he willing to talk to a stranger like me. I just need a second opinion and open my eye & ear big big to learn also... hehehe

      Many thanks


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