Term VS Whole Life Insurance: General Overview

For those who are looking for the life insurance, you have to know that basically there are two types of life insurance. Those are whole and term life insurance. Then, it probably raises the question which one is better. On surface, it is probably not very exciting question but as someone asks surprisingly often lots of people would not truly know difference from of the covers plan. To begin with the policies for the life insurance are coming on two main forms with the number of the sub forms under each of those. Two main forms of the annuity can be headed under title of the whole life policies and also term life insurance. To know more about those, it will be explained term vs whole life insurance in this article.

Things to know about term vs whole life insurance

Truthfully, the both types of the assurance offer at their heart the cash lump to policyholder which is designated the beneficiaries. It is usually for families and the beloved one on policyholder death. There are lots of family either women and men will see needs for several forms of the protection for the family and those should anything unfortunate occurs to themselves. The insurance payout can be substantial and also offer policyholder beneficiary the large financial cushions on event of policyholder death. On the description of term vs whole life insurance, the term assurance is original and first form of the life cover policy.

Additionally, the term life insurance has been the product which is offered by the insurers for well about more than 100 years. The term cover policy is still a really popular fore of the life covers as on most cases the term life policies would be cheapest form of the life cover on the offer. On term vs whole life insurance description, it is explained that term cover would offer the substantial payouts to the beneficiaries on event of policyholder demise. Yet, it doesn’t have the cash lump payouts to policyholders at the retirement as with many deals of whole life. The term vs whole life insurance also mentions that on most cases, the premium paid for the term life covers will be cheaper substantially the universal or whole insurance policy.

For the whole life insurance which is also commonly called as universal policy is the newer form of the life cover. It offers policyholder as with the term cover the large payout to the designated beneficiaries on death of the policyholder. Also, the term vs whole life insurance overview mentions that the whole life policy would provide the cash lump payouts to policy holders on or around holder retirements and at the maturity or completion of the policy. The overview of term vs whole life insurance also mention that the whole life policy can be viewed as the life cover with the attached saving schemes of the pension elements for paying to policy holder around or at the retirement.

The answer related to which one is the best between whole or term life insurance is not straightforward. For those who are looking for cheapest form of the cover and keeping the monthly premiums to the low then the term life insurance policies will almost particularly be your option as will still receive the substantial cover in even of the death. However, if you are looking for much more expensive form of the policy that also has the cash payout at the retirement; you can see the term vs whole life insurance that the universal or whole life must be your option.

Term vs whole life insurance: the description

Nowadays, owning the life insurance is must on some countries around the world. By this, you have to know firstly whether there is differences or not between the whole and term life insurance. The life insurance must be owned for each of you especially for those who have the dependents which are counting on you. On the description of term vs whole life insurance, the insurance will function in providing the protection to families of insured against lost of the income should insured pass away. It will replace lost of the income as well as provide for future wellbeing of beneficiaries. This, choosing and finding right option between whole and term life insurance is truly essential.

The term and whole life insurance are most common type and the basic difference is about the cost which the whole life policy is more than the term one. On the article of term vs whole life insurance, you will know that the term life policy is designed as less expensive one since this only covers insured for the specific period which refers to the “term” itself. The term is probably the issue from anywhere between 1 up to 20 years. In accordance with this, the policy of the insurance will expire after the particular term. Otherwise, for whole life insurance, it will expire since it will cover whole life of insured.

As taking the in depth looks at features of term life, you probably can find that it is available in two kinds of premiums. Those are level and renewable term. For the level term policy, the total costs of premiums are averaged from numbers of the term. It means that annual premium costs are practically just the same throughout coverage terms. In other words, the insured will pay more on early years and it will be less on later years. On the explanation of term vs whole life insurance, it is also mentioned that the similar policies to the level term are known as decreasing term life. For this policy, the premiums will stay level throughout the terms while for the death benefits will decrease.

For the renewable term policy, the premium will rise upon each renewal period. Commonly, the renewal period is after five up to twenty years. The ART or annual renewable term is just the same to this kind of policy. The difference is only about the period which is renewed on every year. This means that the premium cost will increase every year as this is renewed. As alternative, there is whole life insurance which will not expire as mentioned before. Obviously, the whole life policy will cost more due to the absence of expire. The description of term vs whole life insurance also explains that the portion of premium is placed to the savings mechanism which is attached to whole life insurances policies.

The saving mechanism on whole life insurance policy is known as cash value. One of many benefits of these is the policy holders can use that for paying the premiums in event where they can’t pay for that. Regardless of insurance type, talking about the term vs whole life insurance cost will increase with age of the insured. On the term vs whole life insurance, it can be known that the individuals can decide on which insurance type to avail depends on their needs.

To sum up, as you know the differences between term vs whole life insurance, you can decide which one is better for you. Select the life insurance policy which is suitable with your budget and need. By this, you will get the proper one without overspending.

My insurance premium went up. How can I find out the reason for the increase?

Consumers frequently ask us this question. Your agent or insurer should be able to provide you with an explanation other than “there was a general rate increase.” We recommend that you obtain a policy-specific premium breakdown directly from your agent, and that you ask for a rate worksheet comparison between your old premium and your new premium. 

Every policy is priced differently, depending upon the type of coverage you want and what are called underwriting factors.

Underwriting factors for auto insurance may include:

• Household/family driver records.
• Driver(s) age(s).
• Type of vehicle(s).
• The number of miles you drive per year.
• Where you live and/or drive your car.
• Level of coverage being purchased
• There may be surcharges or discounts unique to your situation.

Underwriting factors for homeowner’s insurance may include:

• The age of your home.
• The materials used to build your home.
• Your home’s value, as based upon its size and features.
• Your home’s location.
• Prior claims or losses for the home.

Read more about understanding auto insurance and understanding home insurance.

Questions? You can contact our consumer advocates online or at 1-800-562-6900.

Should We Use All Our CPF for Housing or Save It for Retirement?

Most of us know CPF can be utilised for housing. Now comes the question if we should use all our CPF for housing? I have written a few articles on CPF before and got interested in it when a colleague shared with me how he manage to amass quite a huge sum of money in his CPF accounts by the time he was age 55. The irony was, he was not really a high income worker, earning an average of about $2k-$4k a month throughout his lifetime. He had more than $600K in his CPF accounts just before the age of 55 and he has recently just retired from work once and for all. Furthermore, he has a fully paid up HDB flat in Bishan and is still able to accumulate a significant sum in his CPF accounts.

Some of us may say its impossible to have more money for retirement now because housing prices have risen by a substantial amount. Some of us may say it’s impossible to have more money for retirement now as compared to the 1980s or 1990s because housing prices have risen by a substantial amount. According to HDB's website, the price index of HDB resale flats have risen by about 2.5-3 times. It’s true that housing prices are higher now but our salary have also risen much more than the past.

The CPF system was created to help Singaporeans take care of their retirement, housing and healthcare needs.  If we empty it, we will certainly not have enough for retirement. Let's see what we can do to balance between paying for a house and saving up for retirement.  

CPF accounts earn up to 5% interest (Below age 55)

Most people max out their Ordinary Account (OA) monthly savings in their CPF for housing. Is this a wise thing to do?  Our CPF savings earn us a risk-free interest of 2.5% per year on our OA, and 4% on our SA & MA. The first $60,000 of the combined balance (of which $20,000 comes from OA) will earn an additional 1% interest per year. If I just do a simple calculation and take $50,000 and grow it in the OA, how much would the amount be 30 years later? The answer, about $104,878. The amount which was left inside the OA and not used for housing would have grown more than 2 times. We don't even have to contribute more and the money just grows by itself. This is the power of compound interest.

CPF accounts earn up to 6% interest (Age 55 and above)

Furthermore, CPF members aged 55 and above will also earn an additional 1% extra interest on the first $30,000 of their combined balances (with up to $20,000 from the OA) from January 2016. This is paid over and above the current extra 1% interest that is earned on the first $60,000 of their combined balances.

You can refer to the below infographics to know how much interest you can earn from your CPF accounts;

Optimising OA and SA

One thing we have to take note is when we buy a house using a HDB loan, the savings in our OA will be wiped out to pay for housing. If we have $50,000 in our OA, all will be wiped out to pay for our house and the remaining will be paid in instalments monthly. We will have lesser for retirement and the amount can be quite a significant amount due to the power of compounding. $50,000 earned in the OA at 2.5% for 30 years would have grown to $104,878. This is more than twice of the initial amount.

There is an easy way to build more money for our retirement. If we take a HDB loan for our house, the required down payment is only 10%.  Let's say we buy a $300,000 HDB flat, the down payment is $30,000. If we have a combined OA balance of $80,000 with our spouse, and we take a HDB loan, all our monies will be wiped out to pay for the housing cost if we do nothing.  However, if we decide to build more for retirement and we transfer $50,000 to our SA and leave a combined balance of $30,000 to pay for the down payment, we will easily have more money for retirement.

Just by doing the above, the $50,000 would have grown to about $195,084 in 30 years’ time if we transfer the $50,000 from our OA to SA. This is $145,000 more for our retirement which is quite a significant sum of money. However, do take note there is a limit to the amount that can be transferred from OA to SA, and that the transfers are irreversible and we cannot use the savings in our SA to pay for housing.

Continued use of CPF savings for housing payments after turning 55

This is a common question which people have. Some are shocked when they realise they don't have enough money in their CPF to pay for housing after turning 55. As most housing loans will stretch for 25 years, if we buy a house after the age of 30, there is a high probability that we will still have to continue paying the monthly housing mortgage after the age of 55.

55 years old is the time where we can take out our CPF money subject to the basic retirement sum. However, there are a lot of people who have concerns whether they can use their CPF to continue paying for their housing loan after 55 years old.

Yes, we can use our Retirement Account (RA) savings (excluding top-up monies, interest earned, and any government grants received) above the Basic Retirement Sum and OA savings (including future contributions to the OA) to pay for our property, subject to the applicable housing limits.

When we turn 55, an RA will be created. The savings from our SA and/or OA will be transferred to the RA. If we wish to continue using CPF savings to pay for housing loan instalments, there are three options we can explore:

1. Apply to reserve some savings in our OA from being transferred to our RA before we turn 55, so that we can use them for housing after turning 55; 
2. Use our new CPF contributions to our OA (if we continue working after 55);
3. Apply to use our RA savings above our BRS.

The BRS is in place to ensure we have enough for retirement. We do not want to end up having a house to stay but no food to eat. This is known as asset rich but cash poor. 

Limits on using CPF for housing

Before we even think about using all our CPF for housing, it would be good to know that there are limits on the amount of CPF savings we can use. Using all our money in the OA for housing would possibly mean lesser for retirement. Hence, the housing limits, Valuation Limit (VL) and Withdrawal Limit (WL), are in place to ensure we have enough for retirement. Let's take a closer look at what VL and WL are.

Below is a table from CPF website to show the application of  VL and WL:

Loan From	Type of Home	Applicable Limits	Conditions to use CPF beyond VL
HDB	New flat	No limit	None. You can use your CPF until the loan is fully paid.
	Resale HDB flat/DBSS flat	VL	Below 55 years old To set aside the current Basic Retirement Sum (BRS) in your Special Account (SA)* and Ordinary Account (OA). 55 years old and above To meet the BRS in your Retirement Account (RA), SA* and OA. * including the amount withdrawn for investment. For bank loan, you can only use your CPF up to WL.
Bank	New HDB flat/Resale HDB flat/DBSS flat	VL and WL

Here's a nice info graphic to help you calculate VL and WL:

Conclusion

CPF can be used for housing but there are certain limits to how much we can use so as to ensure we have sufficient for our retirement needs. The power of compounding interest is what makes a lot of people richer and if we just have a little knowledge and leave some money in our CPF accounts, we would surely have more money for retirement.

To me, it is pointless to be asset rich and cash poor. If we buy a big house but have nothing left for retirement, it would be a very sad thing at the end of our golden years where we are supposed to be enjoying life more. Plan ahead, think far and our lives could be much better in the future. 

Term VS Whole Life Insurance: Its Details, Its Benefits, and Its Choice

We cannot deny that life insurance service is the inevitable part of the modern life. We can use it for giving the better life in a modern way. That is different from the past time when such kind of service hasn't needed yet. You must be sure that you know what you are doing with that to be successful in getting the insurance service. So many preparations must be proposed before you ask for the term for the insurance. The significant information needed to be understood is the information about term vs whole life insurance.

The information about term vs whole life insurance becomes important. That relates into the type of the service chosen. It will be wiser for you to use the specific type of the service while you can get these two choices. Without understanding both of them, you cannot make a decision about which one is chosen in line with your need. It is bad for you when you are choosing one service type while that cannot give so many benefits for you. You can start it by reading the information about the options below.

The Details of the Insurance

The classification of the insurance that makes the appearance is done based on the type of the service offered. The term life insurance can be called to as the temporary one. There is the limitation of time for getting the insurance. This one is found as the type of the insurance proposed for getting the education insurance service too besides the health insurance service. You must think about the limitation between, you need it or not.

The temporary insurance can be more interesting because the terms are simpler to be understood. The amount of money must be paid for getting the service monthly can be said as the lower one. If you want to have the insurance service while at the same time, you do not have the great budget for gaining it, the temporary one can be the most appropriate one for you. If you want the type of the complete service including the payment for your burial ceremony, you can choose the whole life one between the options of term vs whole life insurance.

While the term type is the temporary type of insurance, the whole life one is the kind of the permanent one. The consideration of term vs whole life insurance can include about your condition. Some people will need the temporary protection. Other people will need the kind of the permanent protection. Both of them have the different characteristics that can be noticed into more specific one by classifying. The benefits can be gained from each of them. That can make an easier process of choosing which one the most appropriate one for you.

The Benefits of taking the Insurance

The possible question proposed is about the benefits can be gained from them. By understanding the benefits, you can be easier for choosing one of them. The insurance must give you the benefit since without the benefit gained it will be the useless one. You must pay a certain amount of money for getting the service. It must stir into the benefits gained too by you as its payback. The benefits can be gained from them are different between one and another.

The benefits can be gained from the term insurance is the limitation of time. The amount of money must be found to depend on the length of the time. You can choose the most appropriate length based on your condition. That can be ten, fifteen, twenty, twenty five, or thirty years. The flexibility of this insurance type can be referred into another benefit. When you are choosing to use this insurance, you have the chance for changing the service in the whole life insurance.

The benefit can be gained too from the whole life type. If you compare between the term vs whole life insurance, the purpose of choosing one of them is different. If you want the permanent kind of protection that includes the inheritance of your child, choose this one can be better one than choosing the temporary one. You must consider too about the available budget for the monthly payment of the insurance. If it is too hard for you, you can choose the term one. You can change it into the whole life insurance in the future.

Term VS Whole Life Insurance: The Way for choosing the Best One

After understanding some details about term vs whole life insurance, you have an easier consideration to be proposed relating to the act of choosing one of them. The difference between them can be considered firstly. The benefits can be gained from each of them too. The purpose of taking the insurance is for getting some benefits when you are in certain condition with the terms proposed. It will be useless when you have the insurance, but you can get the benefits at all.

There are two aspects must be considered when you want to choose one insurance service type. The first is the company that offers the service. It is important to choose the service only from the trusted company. That relates into the fast time for getting the service at the time you need it. For gaining the best service, you must choose the best company out of the difference between the term vs whole life insurance proposed. The easiest way is by choosing the most popular one.

The second aspect is the service offered. Out of the type of the service offered between the term vs whole life insurance. There is the significant thing too to be noticed from the service aspect. It relates into the details of the insurance terms proposed. Make sure that you understand what is referred by the terms. You can ask for the help from the expert people when you want to propose one kind of the insurance. That can be better, especially for preventing you from choosing the wrong service of insurance.

Refinancing Your Housing Loan To Fixed Rates When Interest Rates Are Rising

Interest rates are rising and is still rising. Back in 2013, I started to write about the possibility of a rise in interest rates which will hurt people who are over-leveraged on debt. That was a time when interest rates were at a very low level due to QE from the US. When they started to reduce and then stop the QE, interest rates started to rise.


Home Loans Rates will be affected immediately

The rise in interest rate will affect most of us who have home loans with the banks currently. The effect is felt almost immediately with many banks starting to revise their home loan packages one by one. No longer will we see home loan interest rates of less than 2% soon. Previously, many people switched from HDB loan to bank loan to take advantage of the low interest rates which was only 1%+. With their CPF OA giving interest at 2.5% and them paying less than 2% for their mortgages, many would have benefited from switching.

However, did you know the average historical interest rates is about 3.5%? The rates will be going in that direction and probably will reach 3.5% very soon. This is also a rate set by MAS when calculating the total debt servicing ratio (TDSR). Our central bank wants to ensure people are still able to service their loans even when interest rates rise to 3.5% which is the average historical rate we should be looking at too.


The rise in SIBOR and bank's board rate

The SIBOR and board rate are 2 of the most common variable loan packages in Singapore. If you're not sure which loan package you are on, chances are you are also on the SIBOR or board rate packages. This is because if you do not refinance your housing loans, your loan package will automatically be changed back to the variable rate package even if you are on fixed rate previously.

Recently, UOB and Maybank separately announced to their customers that they will be increasing their board rate. Maybank announced that their board rate will increase by 0.25% effective 18 February 2016 and UOB announced their board rate will increase by 0.5% from 15 February 2016.

The 3M SIBOR has also increased from 0.25% in 2011 to 1.25% just last week. This is already a 1% increase in interest rates.


Revision of Fixed rate packages in Singapore

Fixed rate packages are not spared either. Banks in Singapore have been removing and revising their fixed rate packages in Singapore since the past few months. The revision has gone up by as much as 0.5%. Most fixed rate packages in Singapore are already at more than 2% versus the 1.68% which I saw just a few months ago.

Refinancing to fixed rate packages is the best thing to do in a rising interest rate environment. While most fixed rate packages are already above 2%, there is still have a good fixed rate package which is below 2% but this will end by 31st January 2016.

If you would like to refinance to a fixed rate package that is still below 2%, you can email me at sgyi@homeloanwhiz.com.sg. I will advise you personally on the package and also process the application for you. Here are the services I provide as a mortgage consultant in Singapore: http://sgyounginvestment.blogspot.sg/p/mortgage-consultancy.html

A point to note is if your home loan package is still under a lock in period, you can refinance now to get the good rates as long as the lock in will finish within 6 months. You will not incur any penalty charges. If you wait till the end of your lock in period, by then most of the home loan rates would have been revised upwards.


Mortgage loans are one of the largest expenses which most Singaporeans would have. If we can just save a few hundred a month by refinancing, it will definitely make us more financially well off. For a $400,000 mortgage loan with interest at 2.6%, we would be paying $10,400 in interest alone in one year only. Time to take action before its too late. The good home loan packages will be gone very soon.

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Related Posts:
1. Fixed Deposit Home Rate - The Alternative Interest Rate To SIBOR
2. Prepare To Pay Higher For Your Home Loans If You Do Nothing
3. Should Couples Buy A 5 Room HDB Flat For Their First BTO Application?

No Medisave Minimum Sum From 1 January 2016 – Here Is What You Need To Know About It

This article was first published by DollarsAndSense.sg

During the Singapore Budget earlier this year, an announcement was made pertaining to the Medisave Account. Starting from 1 January 2016, there will no longer be any Medisave Minimum Sum (MMS) in place for CPF members.

With 2016 approaching, we decide to revisit this change and look at how it would impact Singaporeans, especially those who are approaching the age of 55.

Scrapping Of The Medisave Minimum Sum

Under the previous scheme, CPF members would need to ensure that they have hit the MMS ($43,500 in 2015) before being able to withdraw excess funds (funds above what is set aside for the Retirement Account) from their CPF Special and Ordinary Account. If they have not hit the MMS level, they will need to provide a top-up from the other CPF accounts to their Medisave first.

From 2016 onwards, there would no longer be any MMS. Essentially, what this means is that CPF members can choose to withdraw monies from their Ordinary and Special Accounts at the age of 55 after having set aside for their Retirement Account (RA).

An Illustration

For illustration purposes, let’s assume 54-year old has the following assets in his CPF Accounts

CPF Account	Before 55	After 55 (Old Scheme)	After 55 (New Scheme)
Ordinary Account & Special Account	$120,000	$26,000	$39,500
Retirement Account	$0	* $80,500	* $80,500
Medisave	$30,000	$43,500 (top-up of $13,500)	$30,000 (no top-up)
Total	$150,000	$150,000	$150,000

* Opt for Basic Retirement Sum of $80,500 and pledge of property

In our example, the individual is able to withdraw an extra $13,500 because he no longer needs to top-up his Medisave Account.


Medisave Contribution Ceiling Becomes Basic Healthcare Retirement Sum

 For those of you who do not know, there is currently a Medisave Contribution Ceiling (MCC), which is $48,500 as at 2015. That means that even if you want to, your Medisave Account cannot go beyond $48,500.

Any further contributions made to Medisave after your MCC has been reached will automatically be diverted to your Special Account instead.

In true Singapore spirit, we will be renaming the MCC from one acronym to another. So we will be going from the MCC to the BHS, which stands for the Basic Healthcare Retirement. Don’t get confused; they are essentially the same thing.

One thing to note about the MCC BHS is that in order to stay relevant with the inevitable rise in healthcare cost in the future, the BHS will be reviewed and adjusted annually.


What Does All These Means To Us?

Whenever we contribute monthly to our CPF accounts, it goes into three different accounts, Ordinary, Special and Medisave. All of these accounts serve different purposes, with Medisave being used for health-related expenses incurred by the individual.

The scrapping of the Medisave Minimum Sum means that regardless of how little you have in your Medisave account, it would have no impact on the money you can withdraw from your Ordinary and Special Accounts after 55. It would require no extra top-ups; aside from the contributions it receives as part of the CPF monthly contributions when the individual is working.

Planning for our healthcare needs is an important aspect of personal finance planning. In this aspect, your Medisave Account is an independent, stand-alone account created to help cover your hospitalisation and healthcare needs.

DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos. 

Can I Buy A Private Property If I Own A HDB?

In the past, there were many people who bought private properties and made a lot of money when they sold it at a much higher price later. Some bought condominiums while some bought landed properties. Private properties are a good form of investments where we can buy it, rent it out or sell at a higher price later. Previously, I wrote that "Your HDB Flat Is Not Really An Investment". This is different for a private property where private properties are generally considered as an investment asset.

It will be almost impossible for most of us to buy 2 condominiums at once and stay in one while renting the other one out. It is too expensive for most people. Now, if I tell you that there is a possibility that we can buy a private property even if we own a HDB, will you be interested? Yes, you can actually own a HDB and still be eligible to purchase a private property. In this post, I will share with you the different ways of how it can be done and also the restrictions to take note of.

Credit: https://www.flickr.com/photos/erwin_soo/8083007078/

How Can I Buy A Private Property If I Own A HDB?

Fulfilling the MOP

To buy a private property when you already own a HDB flat, the first condition you have to meet is to fulfil the Minimum Occupation Period (MOP). The MOP for HDB is 5 years which means you have to stay in your current HDB for 5 years before you are allowed to purchase a private property. This is only applicable for Singapore citizens.

If you are a Singaporean PR, there is no way you can buy a private property while keeping your HDB flat. You will have to sell your flat within 6 months of acquiring your private property.


Restrictions to take note

While it is possible to buy a private property while keeping your HDB, there are certain cooling measures which the government impose to prevent housing prices from going up too fast.

Loan to value ratio for second property and above

The loan to value ratio or LTV is the amount of loan you can get from the bank for that particular property. If the LTV is 90%, it means you can borrow up to 90% of the price of the property with only 10% down payment.

Here's the various LTV for first, second and third and subsequent properties:

1st Housing Loan:

LTV 80% for loan tenure up to 30 years and till age 65 years old. Minimum 5% upfront cash payment, 15% down payment can be paid by CPF

LTV 60% for loan tenure above 30 years and/or above 65 to maximum 75 years old. Minimum 10% upfront cash payment

For 1st housing loan, it is quite straight forward and not much cash is needed for the purchase. All the examples I am using is assuming the loan is from a bank. If you take a loan from HDB for the purchase of HDB flats, the LTV is 90% with no minimum upfront cash payment.

Let's continue to 2nd Housing Loan:

LTV 50% for loan tenure up to 30 years and till age 65 years old. Minimum 25% upfront cash.

LTV 30% for loan tenure above 30 years and/or above 65 to maximum 75 years old. Minimum 25% upfront cash payment

As you can see, the LTV reduces drastically for the 2nd housing loan. If you own a HDB and buy another private property, you may be subjected to this reduction of LTV. But, there are circumstances where you still can get 80% LTV. I will go more into details below.

3rd and subsequent Housing Loan:

LTV 40% for loan tenure up to 30 years and till age 65 years old. Minimum 25% upfront cash.

LTV 20% for loan tenure above 30 years and/or above 65 to maximum 75 years old. Minimum 25% upfront cash payment.


How To Buy A Second Property and still get 80% loan?

As you can see above, for 2nd housing loan, the LTV reduces to 50% and there is a minimum upfront cash of 25% needed. If you buy a $800,000 private property, this is $400,000 down payment with $200,000 cash needed. There is a way to overcome this.

The key to getting 80% loan for your second property is to make it a first housing loan instead of second housing loan. The keyword is on the housing loan. Simply said, if you own a HDB and have already fully paid off all your loans, then when you get a loan for your private property, it will be considered as first housing loan. The number of loans is taken into consideration for the LTV, not the number of properties. In this way, you can own a second property while still be able to get the full 80% loan.


Additional Buyer's Stamp Duty

Another thing to take note is the additional buyer's stamp duty (ABSD).

Here are the various ABSD for different groups of people depending on the number of properties you own:

Singapore Citizens

1st residential property: NIL
2nd residential property: 7%
3rd and subsequent residential property: 10%

Singapore PR 

1st residential property: 5%
2nd residential property: 10%

3rd and subsequent residential property: 10%

Foreigners

1st residential property onwards: 15%


Total Debt Servicing Ratio

Throughout my mortgage consultancy work, TDSR is the most confusing part for most people who want to buy a property. This is also the pain point where a lot of people who want to buy a private property find out that they actually can't afford the loan.

The current TDSR is 60% which simply means you cannot use more than 60% of your gross monthly income to service your loans. This is inclusive of all loans from housing, car, credit cards, student loans etc.

From this, we can calculate out the maximum loan eligibility for each individual. This is very confusing for a lot of people and it won't be easy to calculate. If you need help to calculate your loan eligibility for the purchase of a HDB or private property, you can email me at sgyi@homeloanwhiz.com.sg. You can also email me if you need to take up a new home loan or refinance your housing loan. I provide this service on a complimentary basis. More details of my service here.


Yes you can buy a private property if you own a HDB. It may be a good investment for those who are thinking to go into property investment. You don't have to sell your HDB and buy 2 condominiums in order to rent it out. Can I buy a private property if I own a HDB? Yes you can!

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LIC New Jeevan Pragati Table no 838

LICs New Plan Jeevan Pragati (Table no 838), This is a non-linked, with-profits Endowment Assurance plan. The main feature of this Jeevan Pragathi plan is the ‘sum assured on death’ (part of death benefit) automatically increases after every five years during the term of the policy.

Key Features & Eligibility Conditions of LIC Jeevan Pragati Plan

ELIGIBILITY CONDITIONS AND RESTRICTIONS:

• Minimum Basic Sum Assured (payable on maturity) : Rs. 1,50,000/-
• Maximum Basic Sum Assured : No Limit (Maturity Sum Assured shall be in multiple of Rs. 10,000/- only)
• Minimum Policy Term : 12 years
• Maximum Policy Term  : 20 years
• Minimum Age at entry for Life Assured : 12 years (completed)
• Maximum Entry Age : 45 years (nearer birthday)
• Maximum Age at Maturity for Life Assured : 65 years
• Premium payment mode : Yearly, half-yearly, quarterly & monthly.
• Accidental Death & Disability Benefit Rider is available on payment of additional premium.
  • Minimum Accident Benefit Sum Assured is Rs 10,000
  • Maximum Accident Benefit Sum Assured is an amount equal to the Basic Sum Assured subject to the maximum of Rs 1 cr.
  • Minimum entry age for the rider is 18 years

Benefits under LIC’s Jeevan Pragati policy

• Death Benefit under Jeevan Pragati Plan : On death of the Life Assured during the policy term, the Death Benefit  which is ‘Sum Assured on Death’ + Vested Simple Reversionary Bonuses + Final additional bonus, if any, shall be payable to the nominee. The Sum assured on death automatically increases every fiver years. Where “Sum Assured on Death” is defined as the higher of  a) 10 times of annualized premium (or) b) Absolute amount assured to be paid on death, which is as under;
  • i) During the first five policy years : 100% of the Basic Sum Assured.
  • ii) During 6th to 10th policy years : 125% of the Basic Sum Assured.
  • iii) During 11th to 15th policy years : 150% of the Basic Sum Assured.
  • iv) During 16th to 20th policy years : 200% of the Basic Sum Assured.
• Maturity Benefit payable under LIC Jeevan Pragati Policy : On survival to the end of the policy term, the maturity benefit which is ‘Sum Assured on Maturity’ + Simple Reversionary Bonuses + Final Additional bonus (FAB) if any, shall be payable to the policy holder. Sum Assured on Maturity is equal to Basic Sum Assured.
• Final Additional Bonus shall not be payable under paid-up policies..
• The Bonuses shall be declared on the Basic Sum Assured.
• The date of commencement of risk under Jeevan Pragati plan will be immediately from the date of issuance of policy.

MODE OF PREMIUM PAYMENT:  The modes of premium payment allowable are Yearly. Half Yearly. Quarterly, and Monti (ECS only or through salary deductions).

GRACE PERIOD FOR PAYMENT OF PREMIUM: 

• A grace period of one calendar month but not less than 30 days will be allowed for Quarterly, Half Yearly  and Yearly premium paid and 15 days for monthly mode of payment.
• If the death of the Life Assured occurs within the grace period but before the premium then due, the policy will be treated as in-force and the benefits will be paid deduction of the said unpaid premium and also the unpaid premiums falling due before next policy anniversary
• If premium is not paid before the expiry of the days of grace, the policy lapses.
• If the Policy has not lapsed and the claim is admitted in case of death under the where the mode of payment of premium is other than yearly, unpaid premium(s).
• The above grace period will also apply to rider premium as the rider premium is to be along with the premium of the base plan.

REBATES:
The rebates for base plan are as under:

Mode Percentage

• Yearly mode : 2% of tabular premium
• Half-yearly mode : 1% of tabular premium
• Quarterly and monthly mode : NIL

High Basic Sum Assured Rebate:

• 1,50,000 to 2,90,000 : Nil
• 3.00,000 to 4,90,000 : 1.50 % B.S.A
• 5,00,000 to 9.90.000 : 2.00 % B.S.A
• 10.00.000 and above : 2.25 %° B.S.A
• BSA –  Basic Sum Assured

Lic New Jeevan Pragati Plan 838

LIC New Jeevan Pragati Premium Payment Plan 838 Details

Lic New Jeevan Pragati Plan Table 838 Features

Lic New Jeevan Pragati Plan 838 Premium Calculator

Other Plans :  LIC New Jeevan Anand Plan Table No - 815, LIC New Endowment Plan Table No - 814

LIC vs PPF & LIC Jeevan Anand Vs PPF

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The Art Of Investing

Investing seems like the easy way where we can make our fortune or can give us a hope for a better life. There are so many ways to investing and each one of us have different investment styles and strategy. There is never a one size fit all approach. To me, investment is more of an art than a science.

I've been investing for the past 5 years and there are certainly ups and downs in my investing journey. I would say that over the years, I've come to realize that investment is really an art. We can have the best investment knowledge but in the end still lose money from our investments. There is no guaranteed way of making money from our investments.

With that, here are some pointers for those who are just starting out investing or even if you've been investing for quite some time, I hope these reflection of mine will be beneficial for you too.

1. Focus on taking care of the downside, not on making money

Risk management is very important in investing. We do not want to put all our money into one stock or one investment thinking that its going to make us a lot of money. Even if you've researched about this company for many years, situation can still take a u-turn, catching us off guard.

In this era where information moves very fast, competition can come in very fast too and affect a company's profit entirely. Nokia and Siemens were two of the biggest mobile phone and telecoms giant 10 years ago but now they are defeated by competition from Apple and Samsung. Kodak was one of the biggest photographic film company many years ago but it has now been replaced by digital cameras and smart phone cameras.

In investing, we should think about how much we are willing to lose and if we lose this amount will we still be able to live our lives normally? It would be foolish to borrow money for investment as we could lose more than what we have in an instant. That to me is too much risk. I would only invest the money I am able to lose.

2. Investment is not a get rich quick scheme

Do not treat investing as some kind of scheme where you can get rich quick very fast. This happens mostly for people who do not have too much money now but want to have more money faster. The temptation of getting huge passive income and double or triple the money we have from investing is always there.

It is true that we can get passive income and capital gains from investing. But it certainly does not happen as fast as we thought it would be. It would be prudent for us to manage our expectations of the investment returns which we can get from investing. Is 10% p.a achievable in the long term or maybe just 5% p.a? I would say it is not easy to make more than 15% investment returns consistently for many years. You may be lucky for a few years but things may turn around.

3. Focus on accumulating more capital from other sources

Throughout the years, the capital I accumulated did not come from investment mostly. It came from the income I had from work and other active income. While we are investing and learning all we can to grow our money, do not forget to build up your skills and increase your active income as well. The more income you have, the easier and faster it is to save money provided you do not spend it all away.

A person who has accumulated 1 Million dollars can just invest with an investment return of 5% and he will get $50,000 a year. If we only had a capital of $50,000, 5% investment return is just $2500 which is not a lot.

Over the years, I have been trying to create multiple streams of income. Today, I have income from at least 4 different sources. It wasn't an easy task and requires a lot of time and effort. What I want to highlight is most of my income still does not come from investments alone. It comes from learning new skills and working hard to increase my active income. Passive income, although important, does not come easy and fast. My passive income has been increasing but its still not a significant amount yet.


In conclusion, investment really takes experience. Getting your hands dirty, falling and picking yourself up and going through some pain in order to learn it the hard way is part and parcel of the the process to invest better. Sometimes, it does require patience to ride through cycles and see your investment profit after a few years. Yes, sometimes it takes years to see results. Those who have the patience will get to eat the fruits at the end.

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Medicare offers weight loss program

A new year has started and many of us have set weight loss as a goal. You may be thinking of looking into one of the many weight-loss programs available to consumers. However, if you’re on Medicare, did you know that it pays for obesity screening in some cases as a preventive service?

For people who qualify for the obesity screening, Medicare pays for up to 22 face-to-face intensive counseling sessions during a 12-month period with a primary care doctor who accepts Medicare. Qualifying clients have a body mass index (BMI) of 30 or higher. 

The Columbian newspaper in Vancouver recently featured a medical clinic that provides this service for Medicare recipients.

If you are interested in this service, first you should contact your primary care doctor to see if he or she offers this type of program. You can read more about the coverage on Medicare’s website.

LIC NEW Jeevan Shikhar Single Premium Plan 837

LIC Jeevan Shikhar Plan 837 Features and Benefits

Plan 837 Jeevan Shikhar is extended up to 9th May  2016.

Jeevan Shikhar is a single premium plan wherein life assured will have an option to choose the amount of Sum Assured and the premium payable shall depend on the chosen amount and entry age of life assured.

Features

• Minimum Entry Age of Life Assured : 6 years (completed)
• Maximum Entry Age of Life Assured : 45 years (nearer birthday)
• Sum Assured on Death : 10 times of tabular single premium
• Minimum Maturity Sum Assured  : Rs.1,00,000/-
• Maximum Maturity Sum Assured : No Limit (Maturity Sum Assured shall be in multiple of Rs.20,000/- only)
• Policy Term : 15 years
• Premium payment mode : Single premium only

Death Benefits

On Death during the First 5 years of Policy

Before the Commencement of Risk:  In case life assured dies before the commencement of the risk, single premium amount without any interest will be refunded to the nominee.

After the Commencement of Risk: In case life assured dies after the risk is commenced, an amount equal to 10 times of tabular single premium will be payable to the nominee.

On Death after first 5 but before maturity of the Policy

In case life assured dies after first 5 years of policy but before maturity of the policy, an amount equal to 10 times of tabular single premium along with Loyalty Additions, if any, will be payable to the nominee.

Maturity Benefits

On life assured survives throughout the policy term, than Sum Assured on Maturity along with Loyalty Additions, if any, shall be paid.

LOAN: Loan facility shall be available under the plan at any time during the policy term after. 3 months from the date of acceptance of risk or after expiry of the free-look period, whichever is later. Depending on the age at entry, the maximum loan that can be granted as a percentage of surrender value for different policy terms are as under:

Policy year	Maximum Loan Amount as a % of surrender value for age at entry <=35	Maximum Loan Amount as a % of surrender value for age at entry >35 years.
*3 month  to 3rd	55%	35%
4th  to 6th	65%	50%
7th  to 9th	75%	70%
10th  to 12th	80%	80%
13th to 15th	85%	85%

*3 month means loan can be availed after three months from Date of acceptance of risk or after expiry of the Free-look period, whichever is later.

SURRENDER VALUE:

The policy can be surrendered at any time during the policy year.  The Guaranteed Surrender Value allowable shall be as under:

·         First year: 70% of the Single Premium.

·         Thereafter: 90% of the Single Premium.

Single Premium mentioned above shall not include any extra amount if charged under the policy due to underwriting decision and taxes.

The Corporation shall pay Special Surrender Value as applicable as on date of surrender provided the same is higher than Guaranteed Surrender Value.

If the policy is surrendered after completion of five policy years applicable Loyalty Addition, if any, shall also be payable.

Tax: Statutory Taxes, if any, imposed on such insurance plans by the Govt. of India or any other constitutional tax Authority of India shall be as per the Tax laws and the rate of tax as applicable from time to time.

The amount of  Service Tax payable as per the prevailing rates shall be payable by the policyholder on single premium including extra amount if charged under the policy due to underwriting decision, which shall be collected separately over and above in addition to the premium payable by the policyholder. The amount of Tax paid shall not be considered for the calculation of benefits payable under the plan.

Other conditions and policy features

Policy can be surrendered at any time during the policy term: First year- 70% of Single Premium, Thereafter-90% of Single premium

1. Loan facility is available under this plan, after 3 months of the issuance of the policy.
2. Policy can be taken from back date up to same financial year
3. Nomination and assignment in this policy is available.
4. This plan is available for sale up to 31/03/2016.

 

Related Plans :  LIC Single Premium Endowment Plan - 817 , Lic Jeevan Sangam Single Premium Payment Plan Table No 831