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This guy has 800K in his CPF. (AK responds to HWZ Forum.)

A reader pointed me to a thread in HWZ Forum which discussed about my CPF savings being more than $800K. He wanted to clarify certain que...

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Jobless and still paying $30,000 a year for insurance.

Wednesday, October 5, 2016

Hi AK,
I happen to come across your post and decide to email you for some advice.
I am 41 and currently jobless as was retrenched. The only jobs available if I am willing to do is probably Security guard, Taxi driver etc. I am jobless for more than a year!
Good news is I have about 200k my CPF OA and and 203k in my SA. If based on your compound theory and I leave the money till I reach 65 in CPF, I think my retirement is still ok. I have no debts.
But the bad news is those life insurance premiums which I took them up during my work years is a big bulk of my expenses. It is about 30k annual premiums in total.

I have thoroughly look thru all the policies and if I were to surrender them, that will be a big losses and also ceasing all my coverage. Also my health is not good now so it is not possible to get insurance companies to underwrite at good terms in future.
I have about 200k worth of liquid savings, no investments. If I don’t do anything now, it will be depleted in few years’ time. Do you think I should wait for a good opportunity then put the bulk of my 200k savings inside the stockmarket or I should start now to invest into some products that offer yield now?
Mr Undecided

Hi Mr. Undecided,

No one can really tell you with certainty if it is the best time to invest in stocks now or if you should wait.

Unless your employment situation improves, having more cash on you now is probably prudent.

I do not know what your poor health situation is like now but paying $30,000 a year for life insurance sounds like you might be paying too much.

The fear of losing money in the form of premium paid in the past holds people hostage. Their cash flow now and in the future suffers because of this mental trap.

Why continue to overpay for years to come just because we fear losing money we overpaid before?

You should consider how you might be able to lower the premium while enjoying the right amount of coverage (as you could also be over insured). No one cares more about our money than we do.

Your ample CPF savings is a relief and being debt free, if you could control your expenses well over the next 14 years and find a job within the next 2 or 3 years, your $200K in liquid savings should give you peace of mind. :)

Best wishes,

Related posts:
1. A cornerstone in retirement funding.
2. Term Life Insurance: Why and how?
3. The instant gratification of yield.


apex property investment said...

You can take a premium holiday and still be insured. $30,000 for insurance for yourself? are you overpaying? How much do you insure yourself for? Who do you insure yourself for?

Better to get a quality advisor to review everything in view of your status. Sack the old one... cos that insurance agent just want to sell you policies.

$30,000 a year saved, would be $150,000 over 5 years, and given 5% returns, is $7500 a year, that would help in your cashflow.

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