Wednesday, February 12, 2014

Money for the future

Insurance agents can be very persistent. I have been receiving missed calls since last week and when I wanted to return the call, it always could not go through. 2 days ago, the same number finally called me at the time when I was at my table and thinking that it was something important, I gladly picked it up. It was an insurance agent. Not being racist here but listening to a thick Filipino accent did not exactly give a good first impression as it could be quite challenging to listen.

The woman claimed that she was from ACE Insurance and was offering an "exclusive" insurance only so selected Standard Chartered Bank clients. The offer was so "exclusive" that I could not find the information anywhere, not in the bank's website, not in the ACE Insurance website, and not in the internet in general. I found it too exclusive and made me suspect that it was a scam. Haha..

I never heard of such plan before so I found it quite appealing initially: $300 per 24 hours of hospitalisation cash and it applies to worldwide coverage. I can claim the main hospital bill from my company and a separate $300 from the insurance. Furthermore if no claim is made in a year, I can get 20% of it refunded! Wow.. Of course I am aware some red tapes when it comes to insurance claim so I am not going to make an uninformed decision. It is quite ridiculous that I have to say that I enroll to the programme on the phone before I can get more details on the policy. The further we talked, the pushier the woman got. Haha.. I asked to call on another day because I needed time to do research and I had been avoiding her calls. So bad.. Haha..

I asked my colleagues whether they have heard of such plan. Lol obviously no. One of them recommended me to her personal financial planner. Her family members (and even extended family members) are also being managed by the same person so I think that provides good enough testimony. In addition, she is an independent financial planner that can recommend any available products, rather than being employed by an insurance company and will push only certain products.

I just met her today and it was a very fruitful discussion. I had a bit of information from my friend's friend who happened to be an insurance agent with a bank. I met her about 2 years ago when my purpose was really to know more about financial planning, rather than intending to get something. I just started working back then and had little saving so don't talk about buying insurance plans etc. In addition, I had concerns whether my status, in case I turn PR, will affect the whole thing. I got my answers today. Hehe..

Anyway just for recap (in case I forget about tonight's session), there are 2 aspects of financial planning: the fundamental, which is protection, followed by accumulation. There are 2 types of protection: income protection and expense protection

Expense protection is quite straight forward as it is the typical health and accident insurance plans etc. You basically pay money to safeguard in case something bad happens to you and you need to be hospitalised. If you are so lucky and healthy and make no claims, you still won't get any of the money paid back.

Income protection is something new for me. Those death or disability insurance falls on this category. Basically it protects you in the event that somehow you are no longer able to work due to permanent disability, illness, or death. Typically, the payout is 10x of the annual salary when you enroll which means if really suay that you can no longer work, you can still survive for another 10 years. If you are unlucky and something happens tomorrow, you can straight away get your 10x annual salary and the plan stops there. If nothing happens for many many years, you can stop paying when hitting certain age but the coverage will continues until the day you die or decide to stop the plan. Stopping the plan means you can get all the money you have been paying + some interest!! Hmm..

For wealth accumulation, there are savings and investments. As I am still a poor guy, I shall focus on the savings for now. Other than the meager returns offered by banks (be it regular savings or fixed deposit), there is another product which allows you to regularly depositing money for 25 years before maturity. Upon maturity, you can get 3-4% compound interest wor!! I am quite amazed that these are not considered investment products but none of the banks has these. Banks typically offer structured deposit which falls under "investment" and thus uninsured in the event that the bank goes bankrupt! I put some of my savings to fixed deposit in mid-January and I realised that my savings or fixed deposit with a bank is only insured for up to $50000. That means I should not put more than $50000 in any bank if I don't want to lose anything in the event bank collapse. Waleaw.. so troublesome to open more bank accounts to mitigate such risks sia.. However, for products related to insurance companies, the government actually insured 100% capital so in the worst case scenario, I can get all my money back with 0 interest! Hmm.. at least I don't lose anything la.. In addition, in the event that an insurance company is going bankrupt, usually a bigger company will try to take over to grab the ready pool of clients. That really sounds quite comforting.

Anyway, I will see her back in 2 weeks time for some product recommendations and I shall see how. The most depressing thing that I realised today was that my spending was higher than regular people. Sigh.. thanks to my rental. After I checked my expense history for the past 2 years, I realised something even more depressing: my spending for anime/manga/toys related is really exhorbitant and in reality I spent more than what I projected during my discussion! Jeez.. This has got to stop somewhere leh :(

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