How much do you have your your CPF account now?
Do you think it is enough for you to retire by relying solely on your CPF account at age 65??
"Those in the lower income group are especially at risk as their CPF will not provide sufficient savings for them in their retirement, and the situation is made worse by major withdrawals such as housing purchases", said Professor Hui Weng Tat, associate professor at the Lee Kuan Yew School of Public Policy.
Assuming that HDB purchases made at age 30 at the maximum price supportable by CPF contributions with two spouses contributing to mortgage payments, the income replacement ratio would drop to between 17 and 28 per cent for the different wage groups, at the retirement age of 65.
This would mean that a person with post secondary education earning $1,500 as his starting pay at 22 years old can only expect to live on 45 per cent of their last drawn pay when they retire. If only one spouse is working and repaying mortgage, the effect would be doubled.
So I would strongly advise everyone to do a proper financial planning and take up retirement savings plan to have a better retirement future. And the best age to start retirement savings is now, the earlier the better. Everyone can start when they just started working at age 25 after their university, and earn the power of compounding interest.
Source from Yahoo! Newsroom
Monday, February 13, 2012
Tuesday, February 7, 2012
My Term Insurance
I got myself a Term insurance for my life due to my budget and needs.
With my age, to get a ILP or whole life will need at least $150-200 a month for a $100K payout. So a $100K payout for my 2 kids are way too little, so ILP or whole life is definitely out of my range. I need a minimal of e.g.$450k to support my kids till they are age 21 if I were to die now. So my agent advised me to get a term life and the rest for accident, education and retirement plans.
I do not need a plan with cash value as I will not want to cancel my life policy when I cant afford at a later stage of my life, so my objective is to be able to provide eg.$450K to my family if I was to leave the world, without the need to struggle to pay the premium and at risk of terminating it at the end of it.
For Term of $450,000 Death and TPD payout,
For age 21, female (non smoker) , it costs $22.50 a month
For age 27, female (non smoker), it costs $27 a month
For age 33, female (non smoker), it costs $45 a month
Premium is determined by age and payout.
For ILP of $450,000 Death and TPD payout,
For age 21, female (non smoker) , it costs $183 a month
For age 27, female (non smoker), it costs $215 a month
For age 33, female (non smoker), it costs $259 a month
Premium is determined by age and payout.
To fulfil our needs and provide adequate coverage, we must know our budget. For a 21 year old female (non smoker), annual premium paid is $270 vs $2196. That is a big price difference. Unless you have the extra budget, ILP would be a good choice too. ILP is flexible. You could withdraw partial money out in near future for holidays/school or late future for retirement when you no longer need to provide a living for your kids or family.
So all in all, to weigh what is your goal and objective is very important.
With my age, to get a ILP or whole life will need at least $150-200 a month for a $100K payout. So a $100K payout for my 2 kids are way too little, so ILP or whole life is definitely out of my range. I need a minimal of e.g.$450k to support my kids till they are age 21 if I were to die now. So my agent advised me to get a term life and the rest for accident, education and retirement plans.
I do not need a plan with cash value as I will not want to cancel my life policy when I cant afford at a later stage of my life, so my objective is to be able to provide eg.$450K to my family if I was to leave the world, without the need to struggle to pay the premium and at risk of terminating it at the end of it.
For Term of $450,000 Death and TPD payout,
For age 21, female (non smoker) , it costs $22.50 a month
For age 27, female (non smoker), it costs $27 a month
For age 33, female (non smoker), it costs $45 a month
Premium is determined by age and payout.
For ILP of $450,000 Death and TPD payout,
For age 21, female (non smoker) , it costs $183 a month
For age 27, female (non smoker), it costs $215 a month
For age 33, female (non smoker), it costs $259 a month
Premium is determined by age and payout.
To fulfil our needs and provide adequate coverage, we must know our budget. For a 21 year old female (non smoker), annual premium paid is $270 vs $2196. That is a big price difference. Unless you have the extra budget, ILP would be a good choice too. ILP is flexible. You could withdraw partial money out in near future for holidays/school or late future for retirement when you no longer need to provide a living for your kids or family.
So all in all, to weigh what is your goal and objective is very important.
Term Life Policy vs Investment Linked Policies
In The Edge Magazine Personal Wealth, it discussed that in a 2011 AIA Singapore Nationwide Protection Survey, it highlighted that only one in 10 Singaporeans is deemed to be adequately insured while nearly one in 4 perceived insurance is too costly.
To buy term or ILP depends alot on budget, needs and getting the best overall protection.
If I have $200 a month to spare I could get ILP and all e necessary full protection package. But if I have $100 a month to spare, term will be a better choice than ILP, as you need other parts of the cash for critical illness, accident and hospitalisation plans etc.
When I asked my friends do you think you are fully insured for health protection, most of them will say yes. But when I were to sit down and take a paper and summarise their coverage, all of them are way under-insured.
Within this group of friends I asked, alot of them got ILP from companies like Prudential, AXA etc. And it cost them $120-180 a month, the higher end due to the critical illness rider, but death coverage maybe just $50-100K. Is 50-100K enough for your family? With average annual income of $30K, $100K will be depleted in 3-5 years.
Even if I were to recommend an additional $50 a month to cover all the places they are lacking, they are also unwilling to make any changes, even if they have additional $1000 surplus a month from their salaries.
I asked them why not pay another $50 for basic full protection coverage, much better than what you have now? Then they will reply they are reluctant to do anything to change their situations, do not want to spend much on insurance. As nothing has ever happened to them yet, so they cant see the importance. To make things worse, some want to have better coverage but can't cancel the ILPs as they will make a loss, so they are like stuck for at least 20 years to make some profit from the plans and then see how. Some really do not have additional $50 budget.
This left me thinking, hopefully in 20 years time, when they reach 45-50 years old, no accidents or illness strike them and they are still in their pink of health to get the plans they are lacking all along.
I always feel the agents who approached my friends are not doing their jobs well enough, they never really ensured my friends are fully protected anot with that budget, so I feel they only care about selling something which they could earn the most out of it.
Some people even complained to me they are not being offered the other options in the first place. We are underinsured because cost of living is going up, but it could also be due to some of the insurance agents' main objective is geared towards filling their wallets and secondly to make sure the client’s needs are fulfilled.
My personal agent is the only agent I met so far who is concerned about my needs and coverage first, last his salary. He always makes sure that I gain the best coverage with my limited budget, and all available choices are presented and explained to me. No one has ever go to this extent, I am truly thankful for all he has done for me, my family, my friends and all people who have given him a chance to be customers aka partners.
My rule of thumb is to always get the best overall protection with the budget and needs you have.
To buy term or ILP depends alot on budget, needs and getting the best overall protection.
If I have $200 a month to spare I could get ILP and all e necessary full protection package. But if I have $100 a month to spare, term will be a better choice than ILP, as you need other parts of the cash for critical illness, accident and hospitalisation plans etc.
When I asked my friends do you think you are fully insured for health protection, most of them will say yes. But when I were to sit down and take a paper and summarise their coverage, all of them are way under-insured.
Within this group of friends I asked, alot of them got ILP from companies like Prudential, AXA etc. And it cost them $120-180 a month, the higher end due to the critical illness rider, but death coverage maybe just $50-100K. Is 50-100K enough for your family? With average annual income of $30K, $100K will be depleted in 3-5 years.
Even if I were to recommend an additional $50 a month to cover all the places they are lacking, they are also unwilling to make any changes, even if they have additional $1000 surplus a month from their salaries.
I asked them why not pay another $50 for basic full protection coverage, much better than what you have now? Then they will reply they are reluctant to do anything to change their situations, do not want to spend much on insurance. As nothing has ever happened to them yet, so they cant see the importance. To make things worse, some want to have better coverage but can't cancel the ILPs as they will make a loss, so they are like stuck for at least 20 years to make some profit from the plans and then see how. Some really do not have additional $50 budget.
This left me thinking, hopefully in 20 years time, when they reach 45-50 years old, no accidents or illness strike them and they are still in their pink of health to get the plans they are lacking all along.
I always feel the agents who approached my friends are not doing their jobs well enough, they never really ensured my friends are fully protected anot with that budget, so I feel they only care about selling something which they could earn the most out of it.
Some people even complained to me they are not being offered the other options in the first place. We are underinsured because cost of living is going up, but it could also be due to some of the insurance agents' main objective is geared towards filling their wallets and secondly to make sure the client’s needs are fulfilled.
My personal agent is the only agent I met so far who is concerned about my needs and coverage first, last his salary. He always makes sure that I gain the best coverage with my limited budget, and all available choices are presented and explained to me. No one has ever go to this extent, I am truly thankful for all he has done for me, my family, my friends and all people who have given him a chance to be customers aka partners.
My rule of thumb is to always get the best overall protection with the budget and needs you have.
POWER of COMPOUNDING
The mention of compound interest will usually arouse knowing nods in the room. However, if everyone seriously understood what compound interest is, then there wouldn’t be as many people falling into the depths of bankruptcy due to credit card debts.By taking note of how credit cards employ this very principle on our debts would be a prudent first step.
Essentially, it’s interest generated on top of interest plus the principal sum over a length of time.
A financial instrument with a higher rate of return could help you to achieve the same goal with a smaller amount of savings every year.
And the earlier you start saving,the more wealth you can grow. However, any form of investment will carry a certain degree of risk.
Do you know that if you want to have $50,000 in 20 years' time, you need to set aside $187.50 per month if you invest in an instrument that gives you an annual rate of return of 1%? However, if you only start saving 10 years later, you will need to save $395 per month! So start to set aside savings early.
Conclusively, compound interest works better for us if it happens more frequently. Which is to say, twice yearly is better than yearly and quarterly is definitely better than twice yearly and so forth.
Therefore ideal investment plans should have these features:
- Returns of at least 5%
- Compounding on a monthly basis
- Low risk with high winning percentage
- Flexible withdrawal for liquidity (i.e. one is able to stop anytime)
The Investment Linked Plans (ILP) I got for myself has such benefits too. I hope I could get more in return in 20 years with such plans, than if I were to put the money in fixed deposits or bank.
Essentially, it’s interest generated on top of interest plus the principal sum over a length of time.
A financial instrument with a higher rate of return could help you to achieve the same goal with a smaller amount of savings every year.
And the earlier you start saving,the more wealth you can grow. However, any form of investment will carry a certain degree of risk.
Do you know that if you want to have $50,000 in 20 years' time, you need to set aside $187.50 per month if you invest in an instrument that gives you an annual rate of return of 1%? However, if you only start saving 10 years later, you will need to save $395 per month! So start to set aside savings early.
Conclusively, compound interest works better for us if it happens more frequently. Which is to say, twice yearly is better than yearly and quarterly is definitely better than twice yearly and so forth.
Therefore ideal investment plans should have these features:
- Returns of at least 5%
- Compounding on a monthly basis
- Low risk with high winning percentage
- Flexible withdrawal for liquidity (i.e. one is able to stop anytime)
The Investment Linked Plans (ILP) I got for myself has such benefits too. I hope I could get more in return in 20 years with such plans, than if I were to put the money in fixed deposits or bank.
Don't put off taking up Integrated Shield Plan with rider
From article: Prevention is Better
Healthcare costs are among the most worrisome of financial needs, and it is a need that should not be ignored. As we know, risk of illness rises with age. It is often said that the bulk of one expenses in their retirement occurs in the last few years of one's life when health begins to fail.
One very important way to cover the cost of health care is through insurance.
You can tap your Medisave for limited amounts for inpatient and outpatient expenses, and even for day sugeries and maternity expenses. But it is important that Medisave should be prudently used. Should you retire or cease working and your contribution stops, cash in Medisave could run out fairly quickly given high healthcare costs.
Insurance is a far more efficient way to cover major health expenses.
Hospital and surgical (H&S) plans are one of the most basic of health covers, and are a must for most people unless you have enough wealth to self pay. It is also important to take up H&S plan for your children.
Many people put off taking up a H&S plan because their employers may offer very good and comprehensive cover. But you will need a private plan should you stop working.
Waiting until retirement to take up one is untenable because at a later age you may develop conditions that make you uninsurable.
Please feel free to share with me how u have benefit from healthcare insurance or suffer without it, so we are all able to learn through realistic experience.
Healthcare costs are among the most worrisome of financial needs, and it is a need that should not be ignored. As we know, risk of illness rises with age. It is often said that the bulk of one expenses in their retirement occurs in the last few years of one's life when health begins to fail.
One very important way to cover the cost of health care is through insurance.
You can tap your Medisave for limited amounts for inpatient and outpatient expenses, and even for day sugeries and maternity expenses. But it is important that Medisave should be prudently used. Should you retire or cease working and your contribution stops, cash in Medisave could run out fairly quickly given high healthcare costs.
Insurance is a far more efficient way to cover major health expenses.
Hospital and surgical (H&S) plans are one of the most basic of health covers, and are a must for most people unless you have enough wealth to self pay. It is also important to take up H&S plan for your children.
Many people put off taking up a H&S plan because their employers may offer very good and comprehensive cover. But you will need a private plan should you stop working.
Waiting until retirement to take up one is untenable because at a later age you may develop conditions that make you uninsurable.
Please feel free to share with me how u have benefit from healthcare insurance or suffer without it, so we are all able to learn through realistic experience.
Monday, January 30, 2012
Get Protection when you are healthy
By LIA (Life is worth PROTECTING, INVEST in it),
Take up insurance sooner rather than later
Buy insurance when you are young and in good health. Premiums will be lower than when you are older or when a health condition sets in. For health insurance products, some are not available to people over a certain age or with an existing illness.
From my past experience, I know the importance of buying insurance when one is healthy. For my youngest child, I took up the plan which covers the deductible and co-insurance after she was warded into hospital.
She suffered from bronchiolitis. So when she is discharged, I got her the plan to cover all hospitalisation expenses but she was given an exclusion. She is not accepted for any disorder relating to respiratory. This exclusion is a big one, so many illness falls under respiratory disorder.
Now I got to appeal yearly and hopefully her exclusion could be lifted in time. Luckily I got my agent friend to aid me in this. I got friends where their agents are just acquintances and they have much more difficulties when faced with such situations.
Therefore, don't wait to get yourself protected. When one is applying for insurance, you are required to declare your health status, stating any pre-existing condition you may have.
After the insurance company assessed your health risk, it may lead to one of the following outcomes:
a. Premium Loading: an extra amount is generally equivalent to 30-100 per cent of the standard premium.
b. Exclusions: Pre-exisitng condition to be excluded in a health insurance cover.
c. Delays and Rejections: Maybe scheduled for a follow up review in coming months. And the results of the follow up will be months later. Some applications will be rejected too due to certain illness or conditions the company claused out.
Your plan will go much further if you don't have a pre-existing health condition.Insurance companies know that a pre-existing medical condition can be costly. Even if the insurance doesn’t cover pre-existing conditions, the policyholder may be more likely to have additional issues related to the pre-existing condition. Many plans won’t sell insurance to people with specific pre-existing conditions.
So I would advise you to get one now when you are healthy, don't wait!
Take up insurance sooner rather than later
Buy insurance when you are young and in good health. Premiums will be lower than when you are older or when a health condition sets in. For health insurance products, some are not available to people over a certain age or with an existing illness.
From my past experience, I know the importance of buying insurance when one is healthy. For my youngest child, I took up the plan which covers the deductible and co-insurance after she was warded into hospital.
She suffered from bronchiolitis. So when she is discharged, I got her the plan to cover all hospitalisation expenses but she was given an exclusion. She is not accepted for any disorder relating to respiratory. This exclusion is a big one, so many illness falls under respiratory disorder.
Now I got to appeal yearly and hopefully her exclusion could be lifted in time. Luckily I got my agent friend to aid me in this. I got friends where their agents are just acquintances and they have much more difficulties when faced with such situations.
Therefore, don't wait to get yourself protected. When one is applying for insurance, you are required to declare your health status, stating any pre-existing condition you may have.
After the insurance company assessed your health risk, it may lead to one of the following outcomes:
a. Premium Loading: an extra amount is generally equivalent to 30-100 per cent of the standard premium.
b. Exclusions: Pre-exisitng condition to be excluded in a health insurance cover.
c. Delays and Rejections: Maybe scheduled for a follow up review in coming months. And the results of the follow up will be months later. Some applications will be rejected too due to certain illness or conditions the company claused out.
Your plan will go much further if you don't have a pre-existing health condition.Insurance companies know that a pre-existing medical condition can be costly. Even if the insurance doesn’t cover pre-existing conditions, the policyholder may be more likely to have additional issues related to the pre-existing condition. Many plans won’t sell insurance to people with specific pre-existing conditions.
So I would advise you to get one now when you are healthy, don't wait!
Sunday, January 29, 2012
Are You Ready?
CPF BOARD ASKS SINGAPOREANS ‘ARE YOU READY’ FINANCIALLY FOR THE FUTURE
Media Factsheet Central Provident Fund Board
9 October 2011--
Four Key Themes of “Are You Ready” Campaign
a) Managing Your Cash Flow
The need to manage a person’s cash flow is a basic step in all financial planning. By knowing the key principles of basic money management, a person may be in a better position to consider other aspects of retirement planning and retirement adequacy.
b) Buying a House within Your Means
Buying a house is often the single most expensive financial commitment for most Singaporeans. The essence of this theme is to help Singaporeans understand the principles of prudence and affordability.
c) Taking Charge of Your Healthcare Costs
With rising healthcare costs, there is a need for Singaporeans to be prepared financially and physically for any health uncertainties. It is therefore important to be suitably insured as well as to remain physically healthy.
d) Securing Your Retirement
With increasing life expectancy, it is important to put a financial plan in place as early as possible so that one can be financially independent during old age.
LIA Concerns and On-going Effort
Mr Shermon said that the NTU study statistically validates the under-insurance environment in Singapore.
“This study confirms what many people have been concerned about – that Singaporeans are definitely under-insured and unprepared to cope with the burden of losing a loved oneon whom they are financially dependent."
“This under-insurance will potentially lead to a traumatic change in living standards forthe spouse, school-going children and elderly parents of the deceased.”
“The average figure we currently use as a gauge – 10 times one’s annual salary – is not exaggerated. If 11.3 times is the statistical average, the scale can be even higher in particular circumstances. It highlights the importance of obtaining good quality financial advice to ensure that consumers are adequately covered for their individual needs.”
Mr Shermon said that the general apathy of Singaporeans in calculating the long-term needs of their dependants in the event of their early death, and the misperception that adequate coverage is deemed to be expensive need to be addressed.
“It’s a question of putting ‘costs’ into perspective,” said Mr Shermon.
“If you tell someone that he needs additional coverage of $362,000 to protect his dependants, itappears to be a huge amount. In actual fact, the average 40-year-old working adult needs to pay a premium of less than $4 a day to make up his under-insurance shortfall.”
“Clearly there is much public education to be done in the area of under-insurance.This independent economic study by NTU which was commissioned by the LIA presents some cold hard facts on the level of under-insurance when Singaporeans are faced with early or unexpected death.”
“The LIA is committed to continue efforts to raise awareness of the need for adequate protection for families in Singapore.”
Protection Gap in Singapore Remains Wide
NTU Study finds families in Singapore are financially ill-prepared for loss of breadwinner
The loss of a loved one can trigger an emotional rollercoaster ride.
It can also bring an unexpected financial toll on those who are left behind.The bad news is that the majority of Singaporeans are not adequately protecting their dependants from the ensuing financial burden in the event of their untimely death.
The sad news is that many don’t feel the urgency to do so.These were the findings in two separate projects commissioned by the Life Insurance Association of Singapore (LIA).
These findings are in line with the harsh reality that death claim payouts in Singapore have averaged around $37,000 in recent years, significantly below what is deemed to be sufficient to ensure that families can continue a similar living standard in the event their breadwinner passes on.
Key Findings Of those polled
• Two-thirds had some form of insurance, of which 26 per cent had no idea how much they are covered for
• Almost half (46 per cent) think they are well-covered in terms of sufficient coverage for their dependants
• There is a high level of indifference about getting additional coverage among those who are in a more vulnerable situation
- Of those who do not think they are well covered (54 per cent), as many as 70per cent of them said that they have no intent to purchase higher coverage
- Of those who do not own a policy (29 per cent), some 73 per cent of respondents said they had no plans to buy insurance
Reasons For Non-ownership
Among non-owners, half of whom were from the lower income group (household incomeof less than $3,000), price was the key deterrent (49 per cent).
While some said they did not have the means to purchase life insurance, others said it took a back seat to “more urgent necessities” such as a car and credit card loans.
Further analysis of the results revealed that there was the lack of understanding of how much is needed to pay for premiums to ensure adequate coverage. One should be prepared to pay 10 to 20 per cent of their income towards monthly premiums.“This is a silver lining,” said LIA’s Deputy President Richard Shermon, who had overseen the project. “At least we can address the affordability factor through better education and quality financial advice.”
Methodology
The study took into account the following considerations:
• The resident working population aged 20 to 64 using the average age to be around40;
• The household composition using the average household size of 3.4 members comprising children, adults and senior citizens;
• The household income using the average monthly / annual income per household at$5,400 / $64,800;
• The expenditure per household using the average monthly / annual expenditure perhousehold at $3,244 / $40,819 (accounting for inflation)
The degree of under-insurance was estimated from the perspective of an average working adult. Firstly, his protection needs were assessed, defining this as the lumpsum required on his premature death to satisfy the following objectives:
To pay the funeral expense and all outstanding debts attributable to the individual and to maintain the current living standards of the individual’s dependants for as long as they may be expected to remain dependent on the individual.
Calculating Protection Needs and Gaps
The study determined that the working adult, on average, is estimated to have a protection needs requirement of $480,636 in order to satisfy the objectives set out above.Currently, the working adult is estimated to own, on an average, only $118,639 of life insurance (total of personal life insurance, group life insurance, and dependant protection scheme).
The protection needs of the average working adult translate into 11.3 times the average annual income of $42,427.In reality, however, the estimated existing cover of $118,639 is equivalent to only 2.8 times this average annual income, or 25 per cent of the average working adult’s protection needs.
This means, on average, the Singapore working adult is under-insured by an amount of $361,997 or 75 per cent of the protection requirement.Taken as a whole, the working population in Singapore is under-insured by a whopping $578 billion!
The loss of a loved one can trigger an emotional rollercoaster ride.
It can also bring an unexpected financial toll on those who are left behind.The bad news is that the majority of Singaporeans are not adequately protecting their dependants from the ensuing financial burden in the event of their untimely death.
The sad news is that many don’t feel the urgency to do so.These were the findings in two separate projects commissioned by the Life Insurance Association of Singapore (LIA).
These findings are in line with the harsh reality that death claim payouts in Singapore have averaged around $37,000 in recent years, significantly below what is deemed to be sufficient to ensure that families can continue a similar living standard in the event their breadwinner passes on.
Key Findings Of those polled
• Two-thirds had some form of insurance, of which 26 per cent had no idea how much they are covered for
• Almost half (46 per cent) think they are well-covered in terms of sufficient coverage for their dependants
• There is a high level of indifference about getting additional coverage among those who are in a more vulnerable situation
- Of those who do not think they are well covered (54 per cent), as many as 70per cent of them said that they have no intent to purchase higher coverage
- Of those who do not own a policy (29 per cent), some 73 per cent of respondents said they had no plans to buy insurance
Reasons For Non-ownership
Among non-owners, half of whom were from the lower income group (household incomeof less than $3,000), price was the key deterrent (49 per cent).
While some said they did not have the means to purchase life insurance, others said it took a back seat to “more urgent necessities” such as a car and credit card loans.
Further analysis of the results revealed that there was the lack of understanding of how much is needed to pay for premiums to ensure adequate coverage. One should be prepared to pay 10 to 20 per cent of their income towards monthly premiums.“This is a silver lining,” said LIA’s Deputy President Richard Shermon, who had overseen the project. “At least we can address the affordability factor through better education and quality financial advice.”
Methodology
The study took into account the following considerations:
• The resident working population aged 20 to 64 using the average age to be around40;
• The household composition using the average household size of 3.4 members comprising children, adults and senior citizens;
• The household income using the average monthly / annual income per household at$5,400 / $64,800;
• The expenditure per household using the average monthly / annual expenditure perhousehold at $3,244 / $40,819 (accounting for inflation)
The degree of under-insurance was estimated from the perspective of an average working adult. Firstly, his protection needs were assessed, defining this as the lumpsum required on his premature death to satisfy the following objectives:
To pay the funeral expense and all outstanding debts attributable to the individual and to maintain the current living standards of the individual’s dependants for as long as they may be expected to remain dependent on the individual.
Calculating Protection Needs and Gaps
The study determined that the working adult, on average, is estimated to have a protection needs requirement of $480,636 in order to satisfy the objectives set out above.Currently, the working adult is estimated to own, on an average, only $118,639 of life insurance (total of personal life insurance, group life insurance, and dependant protection scheme).
The protection needs of the average working adult translate into 11.3 times the average annual income of $42,427.In reality, however, the estimated existing cover of $118,639 is equivalent to only 2.8 times this average annual income, or 25 per cent of the average working adult’s protection needs.
This means, on average, the Singapore working adult is under-insured by an amount of $361,997 or 75 per cent of the protection requirement.Taken as a whole, the working population in Singapore is under-insured by a whopping $578 billion!
Thursday, January 26, 2012
Dependants' Protection Scheme (DPS)
What is Dependants' Protection Scheme (DPS)?
The Dependants’ Protection Scheme (DPS) is an affordable term insurance scheme that provides insured members and their families with some money to get through the first few years should the insured members become permanently incapacitated or pass away.
Currently, DPS is administered by two insurers, Great Eastern Life and NTUC Income. The scheme is extended to CPF members who are Singapore citizens or Permanent Residents, between age 16 and 60, when they make their first CPF contribution.
DPS is an optional term insurance which covers CPF members for a maximum sum assured of $46,000 up to age 60. The coverage is worldwide. The DPS benefit will be paid out if the insured member passes away or becomes permanently incapacitated such that he or she can no longer work.
Why should I be covered under Dependants' Protection Scheme (DPS)? What are the benefits of being covered?
The Dependants’ Protection Scheme (DPS) is an affordable term insurance scheme that provides insured members and their families with some money to get through the first few years should the insured members become permanently incapacitated or pass away.
Currently, DPS is administered by two insurers, Great Eastern Life and NTUC Income. The scheme is extended to CPF members who are Singapore citizens or Permanent Residents, between age 16 and 60, when they make their first CPF contribution.
DPS is an optional term insurance which covers CPF members for a maximum sum assured of $46,000 up to age 60. The coverage is worldwide. The DPS benefit will be paid out if the insured member passes away or becomes permanently incapacitated such that he or she can no longer work.
Why should I be covered under Dependants' Protection Scheme (DPS)? What are the benefits of being covered?
As a DPS member, you can enjoy insurance coverage at affordable premiums. Furthermore, the premiums can be paid using your CPF Ordinary/ Special Account(s) savings; no out-of-pocket cash is required.
Source from CPF BoardTuesday, January 24, 2012
Motley Fool is a good read
I always love to read Motley Fool webpage. They are wise when it comes to investment. They are even wiser when it comes to saving for retirement.
He shares the secret behind retiring early. This secret is no big surprise, but it is commonly overlooked — Save, Save, and SAVE!!!! As a young investor, Contributing more money to a retirement plan is more important than playing with investments and trying to “beat” the market by picking the right stocks.
A few examples Motley Fool offers:
Retirement Investing
Manage Money With Your Mate
Budgeting for Lazy People
Why Should I Invest?
When's the right time to invest?
He shares the secret behind retiring early. This secret is no big surprise, but it is commonly overlooked — Save, Save, and SAVE!!!! As a young investor, Contributing more money to a retirement plan is more important than playing with investments and trying to “beat” the market by picking the right stocks.
A few examples Motley Fool offers:
Retirement Investing
Manage Money With Your Mate
Budgeting for Lazy People
Why Should I Invest?
When's the right time to invest?
Check out how much you need for retirement?
Reference from CPF Board,
Congratulations for taking the first step to retirement planning!
The sooner you start your retirement planning, the more comfortable you will live in your retirement years.
Check out how much you need for retirement through:
1. CPF Retirement Estimator - This Estimator gives you a simple way to compute the lump sum savings you may need for your retirement.
2. CPF Retirement Calculator - A more detailed retirement planning. It helps you to determine if your retirement goal is achievable. It determines the amount of savings you need based on your desired retirement age and retirement lifestyle.
3. Determine your asset allocation strategy (Source from MoneyCrashers). Asset allocation involves choosing the right mixture of stocks, bonds, mutual funds, cash, and CDs to invest in. Finding the right asset allocation mix depends upon your age and risk tolerance. At what age would you like to retire? How much risk are you willing to take? The combination of a low amount of current savings with a large amount needed for retirement means taking on more risk. An aggressive portfolio for an individual in their 30′s may consist of 65% stocks and 35% bonds. Whereas a conservative portfolio for an individual in their 50′s may be 40% stocks , 50% bonds, and 10% cash. Younger individuals should primarily focus on capital appreciation. Older individuals should be seeking capital preservation.
Congratulations for taking the first step to retirement planning!
The sooner you start your retirement planning, the more comfortable you will live in your retirement years.
Check out how much you need for retirement through:
1. CPF Retirement Estimator - This Estimator gives you a simple way to compute the lump sum savings you may need for your retirement.
2. CPF Retirement Calculator - A more detailed retirement planning. It helps you to determine if your retirement goal is achievable. It determines the amount of savings you need based on your desired retirement age and retirement lifestyle.
3. Determine your asset allocation strategy (Source from MoneyCrashers). Asset allocation involves choosing the right mixture of stocks, bonds, mutual funds, cash, and CDs to invest in. Finding the right asset allocation mix depends upon your age and risk tolerance. At what age would you like to retire? How much risk are you willing to take? The combination of a low amount of current savings with a large amount needed for retirement means taking on more risk. An aggressive portfolio for an individual in their 30′s may consist of 65% stocks and 35% bonds. Whereas a conservative portfolio for an individual in their 50′s may be 40% stocks , 50% bonds, and 10% cash. Younger individuals should primarily focus on capital appreciation. Older individuals should be seeking capital preservation.
Are You Retirement Ready?
From CPF Projections, the earlier you start to save for retirement, the more you will be able to gain in future, with the least capital you need to put in.Consider this: If you started contributing $100 a month to your retirement account at the age of 25, and you were going to retire at the age of 60, then your account would reach $379,000. If you started saving for retirement at the age of 35 with the same contribution, then you would have just $132,000. The point is obvious. If you start saving NOW, compound interest becomes your best friend when it comes to investing money.
CPF Board always offers good information on our retirement.
Try out the interactive tool Are You Retirement Ready at https://www.cpf.gov.sg/cpf_trans/ssl/rnr/index.htm
CPF for retirement?
Relying solely on CPF for retirement? Do you think it is sufficient?
Most Singaporeans are aware that the Government has planned for their retirement through the CPF scheme. But I personally do not think CPF is sufficient if I rely solely on the compulsory 20% CPF contributions each month, even if I work from age 21 to age 62.
From the CPF Trends Report, the minimum sum (MS) expected is always on the rise. With alot of us using majority of our CPF Ordinary Account(OA) to pay for our houses, it will be difficult for us to hit the MS in future. I foresee without proper investments or planning, alot of us will not have any money withdrawn out at age 55 as we may not have enough to meet the MS at all.
In 2008, about 66.2% of Singaporeans aged 55 do not have MS. More than 2/3 of Singaporeans above 55 will not be able to retire.
In June 2009, CPF Trend reports that only one third (33.8%) of Singaporeans aged 55 met the MS requirement of $106k. According to CPF Life, with MS in 2023, one can expect $570-$620/mth on a Life balanced Plan. With inflation, this sum gets even smaller. And $600 has to cover food, medical, expenses bills (e.g hp), property tax, transport and more.
In 2010, CPF Trends shows only 40.7% of Singaporeans met the required MS, though increasing but still not enough awareness.
In Feb 2011, the MS has been increased to $123,000.
So we should start planning early for our own retirement. Take up savings or investments plans with insurance companies, on top of CPF, for retirement. I personally got mine from AIA, as they are among the best performers for returns last year. I never put my savings in bank or fixed deposits as I know the low interest rate they provide me cant even meet the inflation rate. So save and invest your money wisely.
I hope in few years to come, more Singaporeans will be educated in this importance and more will be able to meet MS. As MS only offers us the most basic monthly amount for retirement, you will need much more to have a more comfortable retirement.
Most Singaporeans are aware that the Government has planned for their retirement through the CPF scheme. But I personally do not think CPF is sufficient if I rely solely on the compulsory 20% CPF contributions each month, even if I work from age 21 to age 62.
From the CPF Trends Report, the minimum sum (MS) expected is always on the rise. With alot of us using majority of our CPF Ordinary Account(OA) to pay for our houses, it will be difficult for us to hit the MS in future. I foresee without proper investments or planning, alot of us will not have any money withdrawn out at age 55 as we may not have enough to meet the MS at all.
In 2008, about 66.2% of Singaporeans aged 55 do not have MS. More than 2/3 of Singaporeans above 55 will not be able to retire.
In June 2009, CPF Trend reports that only one third (33.8%) of Singaporeans aged 55 met the MS requirement of $106k. According to CPF Life, with MS in 2023, one can expect $570-$620/mth on a Life balanced Plan. With inflation, this sum gets even smaller. And $600 has to cover food, medical, expenses bills (e.g hp), property tax, transport and more.
In 2010, CPF Trends shows only 40.7% of Singaporeans met the required MS, though increasing but still not enough awareness.
In Feb 2011, the MS has been increased to $123,000.
So we should start planning early for our own retirement. Take up savings or investments plans with insurance companies, on top of CPF, for retirement. I personally got mine from AIA, as they are among the best performers for returns last year. I never put my savings in bank or fixed deposits as I know the low interest rate they provide me cant even meet the inflation rate. So save and invest your money wisely.
I hope in few years to come, more Singaporeans will be educated in this importance and more will be able to meet MS. As MS only offers us the most basic monthly amount for retirement, you will need much more to have a more comfortable retirement.
Importance of Budget
Who wants to be bothered with a budget? It takes time to examine what you spend, where you spend it, and how much (or how little) you bring in relative to your expenses.
However, if you have dreams of buying a home, paying down debt, taking an exotic vacation, or having a comfortable retirement, planning is vital. And the first step to securing your future is to be aware of how you spend your money today.
First you need to understand the overall picture of your finances--specifically, identifying how money flows in and out of your life--you can better see how to reach your financial goals.
If you're in the dark about how much you spend and where you spend it, changing your habits will be difficult. And even if you're financially comfortable, a budget can help you identify unnecessary expenditures and deduce ways to redirect funds towards your priorities. For example, if you don't realize you spend $100 per month on movies, it will be much harder to break that habit and apply that money toward a priority, such as saving for retirement.
Retirement planning is so vital to your future that it warrants special attention. Alot of Singaporeans have no retirement savings, they solely depend on their CPF which will never be sufficient, and many of those that do have a retirement fund don't contribute enough.
However, even less than $100 per month can increase your retirement nest egg by as much as tens of thousands of dollars, depending on how long you have until retirement and how well your investments perform. This is primarily because retirement funds receive tax-advantaged treatment, and gains have decades to compound. Planning is crucial for enjoying a comfortable retirement.
Also, plan to have a surplus for when you retire. Believe it or not, money will mean a lot more to you when you have less of an ability to earn it.
And it never hurts to have a little extra money in your emergency fund, and budgeting can help you save more so you can sock away extra cash for a rainy day.
Creating and following a budget involves self-discipline and sacrifice, but will help you develop wise spending habits to better manage your finances now and into the future.
Source from Yahoo! Finance
However, if you have dreams of buying a home, paying down debt, taking an exotic vacation, or having a comfortable retirement, planning is vital. And the first step to securing your future is to be aware of how you spend your money today.
First you need to understand the overall picture of your finances--specifically, identifying how money flows in and out of your life--you can better see how to reach your financial goals.
If you're in the dark about how much you spend and where you spend it, changing your habits will be difficult. And even if you're financially comfortable, a budget can help you identify unnecessary expenditures and deduce ways to redirect funds towards your priorities. For example, if you don't realize you spend $100 per month on movies, it will be much harder to break that habit and apply that money toward a priority, such as saving for retirement.
Retirement planning is so vital to your future that it warrants special attention. Alot of Singaporeans have no retirement savings, they solely depend on their CPF which will never be sufficient, and many of those that do have a retirement fund don't contribute enough.
However, even less than $100 per month can increase your retirement nest egg by as much as tens of thousands of dollars, depending on how long you have until retirement and how well your investments perform. This is primarily because retirement funds receive tax-advantaged treatment, and gains have decades to compound. Planning is crucial for enjoying a comfortable retirement.
Also, plan to have a surplus for when you retire. Believe it or not, money will mean a lot more to you when you have less of an ability to earn it.
And it never hurts to have a little extra money in your emergency fund, and budgeting can help you save more so you can sock away extra cash for a rainy day.
Creating and following a budget involves self-discipline and sacrifice, but will help you develop wise spending habits to better manage your finances now and into the future.
Source from Yahoo! Finance
Thursday, January 19, 2012
Straits Times Article-Mind Your Body
"Extract of Don't Let health costs cost you your life"
by Dr Ang Peng Tiam
by Dr Ang Peng Tiam
The doctor said to his patient Mr Teo, an elderly Indonesian in his 70s:" I have good news for you, you have responded well to chemotherapy."
Mr Teo replied:" Thanks for looking after me this two months but I would like to stop my treatment."
Doctor asked:"Why?"
Mr Teo's son explained:" We have no more money to continue treatment."
Its is not unusual for cancer patients to run out of fund halfway. In Mr Teo's situation, he is not subsidised as he is a foreigner.
Standard medication is available at heavily subsidised rate for Singaporeans. In the case of non standard item, such as the targeted agent against specific cancer genes, patient is not subsidised.
Personal Opinion: I feel a critical illness (CI) insurance is important as you will have money, upon diagnosis of critical illness as deemed fit by your insurance company. You could use this payout to opt for the non standard medication, which normally has a higher chance to cure you. Most doctors are also aware of this choice but are unable to present to their patients due to their budget constraints.
In recent years more Singaporeans have been able to afford cancer case in private hospitals, one of the reason is many have chosen enhanced health insurance plans which allow them to receive treatment in the hospital of their choice and have all their medical bills fully covered.
Personal Opinion: Thanks to insurance companies for promoting enhanced health insurance plans excessively to the public. If it wasn't for them, most people would be covered with only Medishield, thus unable to enjoy private hospital facilities. And fyi, based on MOH webpage, http://www.moh.gov.sg/content/dam/moh_web/Healthcare_Financing/Medishield/Comparison_of_MediShield_and_Private_Integrated_Plans/Comparison%20of%20IPs%20wef%2031%20Aug%202011%20Table%204.pdf, AIA has the most comprehensive plan for now.
Wednesday, January 18, 2012
Deductibles and Co-insurance Element in Hospitalisation Bill
What is Deductible and how does it work?
* A policy year is a period of one year, starting from the commencement/renewal date of the MediShield cover. Different policyholders have different commencement/renewal dates for their MediShield cover.
Notes:
a. Co-insurance for outpatient treatments is 20% of a percentage of the charges incurred.
A Deductible is the amount you would need to pay for claim(s) made in a policy year, before there is a payout from MediShield. You only need to pay the full Deductible once in a policy year. However, the Deductible is waived if your claim is for outpatient treatments.
* A policy year is a period of one year, starting from the commencement/renewal date of the MediShield cover. Different policyholders have different commencement/renewal dates for their MediShield cover.
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What is Co-insurance and how does it work?
What is Co-insurance and how does it work?
Co-insurance is the amount you need to co-pay after meeting the Deductible. Co-insurance is lower for larger claimable amounts, thus reducing the percentage share of payment by you for larger hospital bills. Co-insurance is three-tiered, ranging from 20% to 10% as the bill size increases.
Notes:a. Co-insurance for outpatient treatments is 20% of a percentage of the charges incurred.
b. Claimable amount is the lower of the claim limit in Benefits & Claims of Medishield or a percentage of the charges incurred.
Source: Read up more at CPF Board http://mycpf.cpf.gov.sg/Members/home.htm
Tuesday, January 17, 2012
Hospitalisation Plans Are Basics Must Have
Since my kids are born, I got them both a life insurance with critical illness(CI), a savings plan and the best integrated shield plan, but I did not get any plan to cover the deductible and co-insurance.Just like what most parents will think "aiya kids wont be hospitalised so young. Last time when we are young, we also never go hospital before".
Till last year my youngest daughter was warded for broncholitis. I stayed in B1 class for 5 days and with the help of the shield plan I only need to fork out some cash from my own pocket. I could not opt for A ward as I was not covered with the deductible and co-insurance.
In the end I had a bad experience. For the B1 ward, the room is enclosed due to the air conditioning and with my worrying nature,I worried my daughter might contract more illness from the other patients of the ward as her immune system is already very weak. And at night, after much effort to coax my daughter to sleep, we are often awakened by the babies crying and nurses waking the patients up to give medication in the middle of the night. Some parents snored too due to their fatigue. I got very drained and lack of rest and fall sick myself too in the midst of this.
After she is discharged, I finally purchased the additional plans to cover all hospitalisation expenses for both my kids.
This year, my elder daughter was warded into hospital last week due to vomiting and high fever. She did a number of tests and was put on a drip and medication. She was diagnosed with rotavirus and we stayed in KKH for 4 days. I was able to stay with my daughter in A ward without any worries or personal financial expenses because I am covered now for their hospitalisation expenses. We stayed in comfort as we had the room to ourselves which attributed to her speedy recovery.
Do not neglect the importance of Shield Plans and Hospitalisation Plans for you and your loved one. With Singapore rising medical care, without them, if any illness strikes, we may not be able to afford the medical bills if we do not belong to the 'rich'.
One thing you could be glad about, Shield plans are paid by Medisave and hospitalisation cash paid plans are paid annually at very affordable rates.
Feel free to email me at icejula@hotmail.com to ask about which policies I got, what the plans offer, the prices and how I go about claiming it etc.
Singapore Rising Standard of Living
Rich? Financially secure? You'll need to be if you want to live in our country Singapore, which is among top 10 most expensive places.
Source from Yahoo! Singapore news
Wonder what is it like to be an insurance rep
You will sure need a personal financial consultant in your life, just make sure he/she is not a real cockroach.
Rule of Thumb:
A good one will change your life, a bad one will destroy your life.
Monday, January 16, 2012
Temporary Bliss
What do you think about this paper boat?Do you think it can last in the river?
How would you feel if you are this paper boat?
I personally feel most Singaporeans didn't realise they are living life like a paper boat. In calm water they are able to last and beautiful to the eyes.
BUT if it rains or a branch fall and causes a ripple, most paper boats will eventually sink.
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I was not from a well to do family, my mother brought me up all by herself. Everything became unaffordable once my grandmother became diagnosed with brain stem stroke, she became paralysed from mouth down and needed long term nursing care.
Olden people did not believe in insurance so my grandmother did not get any policy at all. To make things worse, my mother had 2 other siblings but none of them offered to help with the hefty medical bills. So to ease my mother from her financial burden, I started work at a young age and was eventually bonded to a company which offered me a lump sum and supported my studies.
Olden people did not believe in insurance so my grandmother did not get any policy at all. To make things worse, my mother had 2 other siblings but none of them offered to help with the hefty medical bills. So to ease my mother from her financial burden, I started work at a young age and was eventually bonded to a company which offered me a lump sum and supported my studies.
I got my mother a life insurance when I started working so I will not face the same issue as what my mother did. I will not need to worry about the expenses if she was hit by any unexpected circumstances. But when I got it for my mother she was 39 so I paid a monthly premium of $600.
I supported the policy and unfortunately my mother died because of cardiac arrest 5 years later. My mother did not have any savings but my decision to get the insurance for her have left me with a sum of money when I needed it most. On top of this, I got a great agent who help me facilitate the claim so I got money to pay for the funeral expenses etc.
Though the payout is not alot, eventually I got married and used it to pay for my house down payment. Now I am happily married with 2 beautiful daughters.
I hope my story will touch the lives of all others I could not meet face to face with. Therefore I started this blog to share my personal knowledge and experience on insurance protection and financial planning which my financial consultant shared with me.
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