How I helped Kevin saved $4,583 yearly in insurance cost over the next 35 years
Has it been a while since you last reviewed your insurance portfolio?
Can you recall exactly what insurance you own, the benefits that you are entitled and the costs you are currently paying for?
Do you feel like you are paying too much for the insurances that you bought 10 years ago?
If you could relate to any of the above questions, read on as there is a high chance that you could be overpaying thousands of dollars a year in insurance cost alone.
Allow me to show you what I mean by that by looking at a real-life example.
The story of Kevin and how he benefited from a portfolio review
Kevin (name changed to ensure confidentiality of client), 49, is a senior manager at an SME engineering company.
Kevin is married to a homemaker and they have three children (age 8 to 12).
Currently, the family is expecting a fourth baby boy at the end of October 2019.
Kevin earns about $8,000 (before CPF contribution and Taxes) and stay in a fully paid 4 room HDB at Bishan.
Apart from the day-to-day expenses of his family, Kevin’s financial commitment includes
cars loan repayment
cost of hiring a domestic helper
children’s university fund (which would cost him a total of $215,831 in 12 - 17-year).
Over the years, the family had bought several insurance policies sold to them by insurance agents. Some of these agents are friends and family whom they found hard to refuse.
As Kevin is expecting his fourth child, he realizes that he has the need to review his insurance portfolio to ensure that the coverage is adequate to provide for his family.
Instead of speaking to another insurance agent whom based on his experience are only product focused, he has decided to approach me – an independent financial planner – to help review his insurance portfolio.
In the process, we uncovered the following problem
He needs more coverage as his current coverage only provides 3 years of his expenses
The cost that he is paying is too high for the existing coverage that he enjoys
He will have to pay the cost of his insurance for a lifetime even after he retires
His children’s insurance portfolio consists largely of Investment-Linked Policy which is inefficient
After doing a thorough analysis of his insurance portfolio, we’ve derived the optimal coverage that he should have today, which is:
Death & Disability: $550,000 (11 years of expenses)
Critical Illness: $250,000 (5 years of expenses)
The coverage is recommended so that in an event of death and disability or critical illness, the payout is sufficient to provide for the family until the first three children become independent.
After deriving the optimal coverage, we then compared the products available in the market today. We came up with plans that could help him acquire the coverage that he needs whilst balancing between his budget constraint and financial commitments.
After our discussion, here is what we have done:
We replaced his current life insurance with term insurance.
We replaced his children’s investment-linked policies with whole life policies.
We used the cash value from the policies surrendered to pay the costs for the first 8 years.
By doing so, Kevin is able to
Have the insurance coverage he needs until his children become independent.
Lock in” the insurance cost for his children so that tt does not increase with their age.
Reduce the payment period to 25 years instead of a lifetime.
Free-up cash flow for the next 8 years and use it to prepare for his children’s education fund
Here’s a quick look at the before and after:
By reviewing and restructuring Kevin’s insurance portfolio, we achieved the following results:
Tripled his coverage for Death and Disability from $150,000 to $550,000.
Increased his coverage for critical illness from $50,000 to $250,000.
Significantly reduced the total insurance cost payable over his lifetime
Reduced the number of years payable for his insurance expenses.
Overall, Kevin now receives the insurance coverage that he needs with a shorter payment period as compared to what his previous insurance portfolio provides.
Here’s a quick look at the before and after for his insurance portfolio:
Before Portfolio Restructuring
After Portfolio Restructuring
What about you? How can you benefit from doing a portfolio review?
Just like Kevin, you too can benefit from doing a portfolio review.
In JUST 90 minutes of consultation, Kevin generated a lifetime cost savings of $160,434 (Average: $4,583 Per Year) from his insurance portfolio WHILE increasing his coverage significantly.
If you have read up to this point, I would like to ask you to think about the possible benefits and the amount of money you could free up for your retirement or children’s education SIMPLY just be doing a review and restructuring your insurance portfolio to make it more efficient.
As the insurance industry develops…
As the cost of insurance decreases…
As your life circumstances changes…
It does not make economic sense for you to continue paying for what you have today without knowing if you still need the coverage or if there is a better option available to you in the market today.
What is Next? Let Me Help You Do the Math!
For you right now there are two options available.
The first option is to do it yourself.
You can read through all your policy documents, study the current market offers and discover for yourself what the next best move should be. Naturally, this option is very tough and time-consuming without the shortcuts that I know of.
The second option is to engage me and let me help you do the math, the reading and the analysis.
Instead of spending months trying to understand complex industry jargon
Instead of spending weeks reading through lengthy policy documents and fund fact sheets
Instead of spending days talking to agents and bankers just to get the information you need
All you need to do is to prepare the insurance documents that you have today and get in touch with me here.
This article is meant to be the opinion of the author and is for information purposes only.
This article should not be seen as a financial advice
This advertisement has not been reviewed by the Monetary Authority of Singapore.