Tuesday, 10 November 2015

Singapore Savings Bonds Vs WholeLife Policy -- My Case

I have two "long time" whole life policies.  The first one (simple whole life) bought on my first week of my army recruit days.  The second one (whole life plus critical illnesses) bought from my army buddy just after my National Service.  I had no financial and insurance knowledge at that time.  On hind sight, probably I would not buy such policies.


After these many years, it's good to know that the money in the policies is not so important to my family now and I do not really need them anymore.  After the launch of the SSB, I want to know whether it is beneficial to terminate the policies and re-invest the money into SSB.

I made a trip to the Insurance service centre and found out the followings:

1. After so many years, the surrender values of the policies are now much higher than my total premium paid. 

2. The policies are now growing at a fast rate after so many years. In fact, for every dollar of premium paid into the policies now, the policies more than double my premium paid. [Unfortunately I cannot increase my premium now!]

3. The returns of SSB cannot match the returns of my insurance policies now.   

My whole life policy may be my mini money making machine after 20+ years in making.  But with years of experience, on hind sight it is not really a good deal as an investment.  Because part of the premium paid goes into the death benefit of the policy, part goes into the investment portion of the policy and part goes to the insurance agent/company.  Hence, it has very low efficiency or returns as an investment tool.

As I did not know about these details then, I think it can be counted as one of my costly mistakes from my younger days.  Probably I could do much much better investing the money myself into the stock market.  The next mistake is that I did not invest when young and lost the years of compounding opportunity. 

But what is done cannot be undone, I would be happier by thinking positively or maybe negatively:

1. The policies do act as forced savings in my earlier days.  Considering that I was "Moonlight tribe" (月光族) once (another mistake), probably I would spend all my money if otherwise.  I am glad that I do have these policies now and they do accumulate a cash value that can be withdrawn.

2. I could have invested more money into the CLOB shares (one more mistake) and suffered a bigger loss.


3. I could have gotten burnt badly during those few market crashes.

4. By buying the policies young, I have logged in a low premium value and the premium stays the same for the whole time the policy is in force. 

In conclusion, I will not invest into SSB.  I am just too far down the road to switch to SSB.  I will treat these policies as the bond portion in my investment for now

However, SSB may still have a place in another person's investment portfolio, under different circumstances.  


  1. Hi, I'm glad to read that you have a good experience with your insurance policy, and is sharing this, unlike the big majority of people who only complain about how insurance is a bad investment product....

    However, the primary objective of insurance is really risk transfer, not investment return. And for that, it has no competition.

  2. Agree about the whole life insurance issues
    After more than 26 years, it seems what a waste if i terminate all the policies.
    The yearly "dividends' from these policies are indeed better return then investing the 'cash values" in the bank or even in some stocks.
    Besides, all the "benefits' of the WL policies can not be changed or taken away.
    And this:-