SC asked 2 years ago
Hi CF and team,
I received legacy planning / debt cancellation quotations from Prudential and GE which offer premium payment of 10-20 years, and it covers me till 99 years old.
- May I know what are the fineprints or caveats that I must be aware of in such insurance policies?
- Do you recommend taking up such policies with short premium payment period? Or is it financially wiser to stick with the ordinary insurance policies where payment term = policy term?For example if my investment return is at 5% only. Should I pay more into insurance (payment term = 20 years) first, or pay less (payment term = policy term, similar protection) and use the extra money to invest instead? And is this consideration correct in the first place?
Thank you.
ERIKA Staff answered 2 years ago
SC, here are things to think about:
- Do you expect to still have debt until 99 years old to justify for the duration of coverage? Or, do you expect to live until 99?
- Do you expect yourself to NOT have any income after 20 years to coincide with the shortened premium payment tenure? And would the regular premiums a burden to your cashflow?
ERIKA Staff answered 2 years ago
As long as the regular premiums (whether shortened or not) is 'manageable' with your current income, and you feel your career is relatively stable/secure, then we opined there is no issue. Still, debt cancellation coverage until age 99 is what most people consider as an overkill.
Earlier, you said this is about debt cancellation quotations from GE/Prudential, but then you later said 'worried about coverage becoming uncertain due to medical inflation'. Reckon you are aware these are 2 different matters, from insurance coverage standpoint?
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