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Things to Consider Before Terminating Your Insurance Policy

I have met many clients to review their insurance portfolios and so far have never come across a single insurance portfolio that was properly designed. The best case was when I just had to add in missing essential elements like hospitalisation and disability income coverage. Far more common were worse cases where the person did not have additional budget for proper insurance, or plain could not carry on with the commitments.

At this point they would ask me if it was wise to give up their existing policies to free up budget or to replace them with proper coverage. Here are some things one needs to consider before making a decision.

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Cash Value Policies – Why are There Losses on Early Termination?

Have you ever wondered one incurs capital losses on early termination of policies with cash values? Ask any insurance agent and the likely answer would be, “oh, these plans are for the long term and hence there are losses incurred when the plan is surrendered prematurely.”

Most people accept this answer readily, if they even ask at all. It seems like a fact of life few people bother to question.
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Financial Advice and Financial Products

Which do you think is more important – the quality of financial products, or the calibre of your financial adviser and correspondingly the substance of his financial advice?

The obvious answer would be that both are important and go hand in hand together, but the reality is that people put too much emphasis on one over the other.

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Willingly Fed to the Sharks

I was recently reminded of this incident that happened a few months ago. I met this person who was recommended an ILP by her agent. The agent went as far as to use skewed calculation and fuzzy Maths to show her that the ILP was much better than a term policy.

Feeling uncomfortable about the recommendation, she sought a second opinion and that was how I came about to give her some advice.

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