Saturday, March 17, 2012

Let's talk about investment-linked insurance

We all know it is good to start an insurance at early age. I found out an interesting point about investment-linked insurance this morning that I would like to share with all of you.

First of all, the example I am going to give is Prudential PruFirst Gift, this is actually a PruLink Protection, it is like an investment-linked insurance. You have to tell them which funds you want to park your money , and in what percentage. For me, I channel 50% monthly premium to PruLink Emerging Markets Fund and 50% monthly premium to PruLink Singapore Growth Fund and these are medium to high risk funds.

With monthly premium of S$200, you actually can get your kid sum assured to S$200,000.
Here is the interesting point, when your kid reaches age 19 (that's when he needs to go to college or university), you need a sum of money for his education fees, this fund now comes handy. Assuming the funds performance is 9% (it is possible if Singapore and Emerging countries are doing well in the next 20 years).

Let say it achieves S$71,100 as what Prudential has projected for 9% , you can actually withdrawn cash S$70,100, and leave just S$1,000 in the insurance, and this insurance is still valid with sum assured S$200,000 to your kid...

My opinion is, you never need to cancel this investment-linked insurance, you can just treat this as your kid "whole life insurance", the only draw back is you or he himself (when he starts to work) has to keep paying monthly premium of $200 per month, but then, remember this monthly premium is the money you buy funds, you can take it back anytime, but don't surrender the policy as this insurance has sum assured with S$200,000, it is good to treat it like a traditional insurance plan, and this is good for your kids generation to benefit.

I am not an insurance agent, I don't sell insurance, but I think this is good plan, and now I have to find out more about my current AIA Arcons of Asia investment-linked insurance. I am still learning.

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