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Life Insurance too good to be true? 75% ROI

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  1. #31
    Original Post Deleted
    Basically you have new account for tax-deductible voluntary contributions.

  2. #32

    Join Date
    Oct 2014
    Posts
    4,188
    Quote Originally Posted by periphery831:
    If I pay in 8600HKD for 20 years (172HKD total) and the payout is 672,000HKD which is around a 75% return when I die, is that normal?

    I find a 75% ROI hard to believe.
    I thought term life insurance is for a payout during the term. That is after 20 years the policy ends unless you choose to extend it in which case you will keep paying new premiums.

    The point of life insurance is to replace my income for X period of years if I die before my children reach adulthood. It's not to get the payout. In the same way I pay car insurance, I don't say gee if I crash my car then I get a payout, yay! Or if I am in an accident and the hospitalization and surgery benefit kicks in on my medical insurance, I'm not calculating ROI for myself.

  3. #33

    Join Date
    Mar 2007
    Posts
    13,099
    Quote Originally Posted by chris_in_hk:
    The purposes of life insurance and investing shouldn't be confused.
    Thats not what my trusty agent tells me
    Who am I going to believe? Some random Internet dude with logic or my trusty insurance peddler that enjoys his commissions

  4. #34

    Join Date
    May 2005
    Location
    Hong Kong Island
    Posts
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    Just wanted to throw in that, I have heard that life insurance can be claimed quite quickly, within a month or so which can be quite useful if you have young children.
    Whereas if you are waiting to inherit your parent's estate after they pass away, it will take months or even years to have the probate approved and THEN get the money in your parent's account and/or property.

    Quote Originally Posted by HowardCoombs:
    Thats not what my trusty agent tells me
    Who am I going to believe? Some random Internet dude with logic or my trusty insurance peddler that enjoys his commissions

  5. #35
    Quote Originally Posted by HowardCoombs:
    Thats not what my trusty agent tells me
    Who am I going to believe? Some random Internet dude with logic or my trusty insurance peddler that enjoys his commissions
    That's a fair point, even when made tongue in cheek.

    I used to work in the industry but there's no need to believe me or anyone. Your adviser should be showing you different options. Get them to show you the math of which option is better and you can look at the math yourself.

    Of course investment returns aren't guaranteed and will vary so you will have to try and balance probabilities. E.g. option A is better if investment returns over the next X years average under Y%
    shri likes this.

  6. #36

    How do you know that you are going to die in 20 years?


  7. #37

    Join Date
    Dec 2002
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    Quote Originally Posted by andreweden:
    How do you know that you are going to die in 20 years?
    How do you know he won't?

    (That's the whole point of cheap term insurance isn't it?)
    andreweden likes this.

  8. #38

    Absolutely correct.


  9. #39

    Join Date
    Sep 2019
    Posts
    4

    All other things being equal, its not easy for an insurance plan to have better yield than non insurance plan. Overall a long time horizon small differences in cost structure will compound.

    However as many have mentioned in this thread, the primary goal for these plan is not about the best optimized yield/risk, but a protection against your rainy day.

    Only you can decide the value of such protection. Also you need to have some awareness what happens if it rains on the insurer...

    For a lot of people its not about the efficiency of plan, but the peace of mind / protection


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