Friday, March 23, 2012

When you realize your savings plan from your insurer earns you 0.5% annually

I was talking to this friend of mine who recently talked to me about his insurance plans. He is a guy who is ahead of his peers in terms of planning his future. He got a savings plan from one of the major insurers in Singapore, saving about $200 a month.

As a student with little income, $200 is quite a significant amount and naturally, he was curious to know the interest he was getting annually. I just did some simple calculations for him and his rate of return was about 0.5% annually. He was shocked and somewhat appalled at the amount and decided to cancel his plan the next day. It will come in as a loss and it is alright in some sense because he knows how to invest and have been doing so for quite some time.

Do you have a savings plan?
Do you know your rate of return?
Do you know how much your advisor is getting paid from the amount you pay for premium?
Other than savings, what kind of insurance coverage am I getting?

I think all these are questions you should have before or after buying a plan. It's our hard earned money after all. It's akin to shopping for clothes where you would want the best value for your money. So, go on! Give your advisor a call if you ain't sure about your savings plan!

This is not financial advice. Please consult a professional advisor.

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