FAQ: Insurance up to age 65

1. Is it necessary to take life insurance to cover the whole of life or up to age 65 only?

The primary purpose of life insurance is to protect against the loss of income due to premature death. You should have the protection for the period of your working life. Most people expect to stop work at 65. They need life insurance to cover the loss of income up to that age.

2. What type of life insurance plan should I buy?

I recommend a decreasing term insurance or family income insurance as they offers adequate coverage at a low cost. Here are some benchmark premium rates:

http://www.tankinlian.com/faq/benchmark.html

The premium rate is likely to be less than 10% of the cost of a whole life policy providing the same coverage. If these are not available, you can buy a level term insurance.

3. How do I save for my retirement?

It is best to invest in a low cost investment fund. A low cost fund has an annual expense ratio of less than 1% per annum, with 50% or more invested in equities. The sales charge should not exceed 2%.

4. Do I need critical illness coverage?

The expenses for treating the critical illness should be covered under a medical insurance poilcy. You can have an addtional cover of (say) one year's salary to cover the loss of income during the period of treatment. This can be covered under a critial illness policy taken up to age 65 and is optional.

5. Do I need life insurance coverage beyond 65 years?

You need an insurance policy to cover the medical expenses. In the past, some people need life insurance to provide money to pay estate duty. With the abolishment of estate duty, this is no longer needed.

6. Can I use life insurance to leave some money for my children?

If you have excess funds, you can buy a whole life policy with premiums paid through a single premium. You should avoid paying premium after your retirement. Make sure that your own needs (to pay your future living expenses) are taken care first, before you think of leaving money for your children.

You should choose an insurance company that gives you a good return on your single premium. Ask a few insurance companies to give you a quotation and compare the yield. You can get the telephone numbers of the insurance companies from this FAQ:

http://www.tankinlian.com/faq/termd.html

7. Should I buy a whole life policy with premiums payable for 10 years or up to age 65?

The policy usually gives you a poor return due to the high charges and expenses. It is better to buy decreasing term insurance to age 65 and invest the difference in a low cost investment fund.

You can use the money from your fund to buy a whole life policy payable by single premium at a future date, if you wish to leave some money for your children.