Change of Ownership for AIG Global Investment Corporation (Singapore) Ltd

I received a letter from American International Assurance (AIA) about a week back regarding the change of ownership for AIG Global Investment Corporation (Singapore) Ltd. Here is the news:

American International Group, Inc (AIG) has announced on 29 March 2010 that it has completed the sale of a portion of its investment advisory and asset management business, including the entity formerly known as AIG Global Investment Corporation (Singapore) Ltd., to Bridge Partners, L.P., an exempted limited partnership owned by Pacific Century Group, an Asia-based investment firm. The divested portion of the asset management business has been branded as PineBridge Investments and operates in 31 countries. With effect from 26 March 2010, PineBridge Investments is an indirect wholly-owned subsidiary of Bridge Partners, L.P.

The resulting change in ownership has resulted in a change of name of AIG Global Investment Corporation (Singapore) Ltd. to PineBridge Investments Singapore Limited. Changes has also been made to the name of AIG International funds and sub-funds. PineBridge Investments is the fund manager for AIG International Funds. This change does not affect the names of AIA Investment-Linked Policy (ILP) Funds.

I hold an AIA ILP which I bought some years back. Here are the consequences for me as far as I can tell:

1. No change to the AIA ILP name. Mine is AIA Achiever.

2. There will be a change in names for all the AIG International Funds. For example, the AIG Greater China Equity Fund is now known as PineBridge Greater China Equity Fund.

Analysis of Asia Junior Life Policy (Part 2)

Previously, I wrote a short analysis on one of the whole life policies that I owned. It can be found over here. Today, I shall continue with my part 2 of the analysis.

In today's analysis, we will look at participating policies and bonuses.

BONUS ALLOCATION

Main feature of a participating policy is its ability to provide stable returns while participating in the performance of a Participating Fund or Par Fund. While one does not have any control over what the par fund is invested in, one can expect to participate in the performance through bonuses which are allocated to the policy holder.

Policy benefits or bonuses depend on the following factors:
1. Investment performance
2. Claims experience
3. Expenses
4. Decision of the Appointed Actuary and approval by Board of Directors

Usually, bonuses are allocated based on the surplus of the Par Fund. When bonuses are being considered, the actuary and directors take into account average performance of the par fund over a period which is longer than one year so as to minimise short term fluctuations in asset values of the par fund.

Hope this short posting explains how bonus allocation works for all you participating policy holders out there.

Analysis of Asia Junior Life Policy (TM Asia Life)

As most of my readers will know, I have a "legacy" whole life policy that I took over from my parents after I started working. My parents bought the whole life policy from an agent in the then Asia Life which is now taken over by TM Asia.

The policy name is Asia Junior Life Plus Assurance with Escalating Reversionary Bonus.

Every now and then, I will try to analyse abit of this complicated insurance plan and try to decipher each and single statement on the policy contract as well as bonus declaration statements to see what it means.

Today, I will try to interpret what I read from the Bonus Declaration Statement in Year 2010.

BONUS DECLARATION STATEMENT IN YEAR 2010

TM Asia was kind enough to send a pretty concise booklet on the Annual Bonus Update 2010 together with my bonus declaration statement for the year 2010.

Here are some key points that I note from the Annual Bonus Update:

1. This is the 3rd published bonus update report for TM Asia Life Singapore Ltd's Participating Fund. The annual bonus update 2010 is an update on the participating fund for the year ending 31 December 2009.

2. For 2007, gross investment returns was 12.25%. For 2008, -17.13% and for 2009, 20.05%.

3. TM Asia Life has an unmatched record of never reducing bonus rates. Since they have never reduced bonuses even during the financial crisis of 2008, we can see that insurance companies typically use a bonus smoothing technique to ensure that bonuses are paid out both in good times and bad. When times are good, they might not pay out too much bonus but instead "store" this money in the par fund so that they can have money to pay out bonuses even when the funds are not doing well. In a sense, the policy owner does not get the wild fluctuations in policy value that is associated with investment linked plans. On the downside, it also means that one cannot expect big bonuses even when the market is doing well.

4. Participating Funds can sometimes be "black holes" of investment where we know little about the assets that are being held. In the Annual Bonus report, I can see that the Top 10 Equity holdings for the Par Fund are:

1. TM Asia Equity Fund
2. DBS
3. UOB
4. OCBC
5. Singtel
6. Capitaland
7. Keppel Corp
8. Wilmar
9. Singapore Airlines
10. Singapore Exchange

5. The bonus rate is $10 for every $1000 Sum Assured. I am insured for $160,000. That means that I am entitled to $1,600 bonus for the year. In ADDITION, there is a bonus added on accrued bonus (by a rate of 1%). As my accrued bonus is now $20,292.02, the bonus on bonus is $202.92. The total bonus I get for this year is thus $1600 + $202.92.

6. The accrued bonus is not the cash surrender value. This is a very important point which many people are often mistaken about. The cash surrender value comprises guaranteed plus non-guaranteed components. The accrued bonus makes up part of this non-guaranteed bonus and is pro-rated according to the number of years I have been servicing this policy. In other words, if I surrender the policy now, only 25% of my accrued bonus + guaranteed component will be paid out to me. (As the number of years increases, the bonus is increased in percentages. That is why it is called "Escalating Reversionary Bonus"). To find out what is this amount, it is best that you obtain a Benefit Illustration from TM Asia Life.

That is all for today's analysis. I will analyse the various components at a later date. As mentioned, what I am analysing is based on TM Asia Life's Asia Junior Life Policy. It might not be the same as other insurance policies that are out there. If you are interested in me doing an analysis for your policy, you can send the relevant documents to my email at sgfinancialfreedom@gmail.com. Your name and stuff will be kept confidential but I will analyse the policy and publish my findings on this blog.

The Fear of Something Specific is More Real than the Fear of Something General

As humans, we fear the specific more than the general.

I stumbled upon this thought while reading Al Gore's "Assault on Reason". In one of the chapters, he gave the example of how people would rather buy air travel insurance that covers specifically terrorist threats compared to just a normal air travel insurance (which by the way, also covers terrorist threats).

Somehow, it seems that people are more afraid when they know the specifics of what they have to be afraid of.

Air travel insurance.... No way... But air travel insurance that covers terrorist attacks...Now, that paints a picture in the mind of the consumer and the fear of this improbable event becomes more real (Remember September 11?).

The fear of something specific - something we can visualise - is often more real than the fear of something general.

That is why we see advertisements about critical illness insurance that mentions specific illnesses like cancer. Critical illness just seems too general and nobody really knows what critical illness means anyway. But highlight the specifics and you sort of create a visual image in the person's head. Let me show you 2 scenarios that helps bring out a person's fear when the specifics are highlighted.

Scenario #1

Insurance agent: Let me show you this plan which gives you coverage for critical illness.

Consumer: I don't think I need insurance. (Thinking in his head: What on Earth is critical illness?? Better not ask.. Later I look stupid)

Scenario #2

Insurance agent: Let me show you this plan which provides coverage against Cancer, Heart Attack, Stroke...

Consumer: Wah... okay..how much does it cost?

The above just highlights two simple scenarios. It could be the same insurance product that is being recommended but when one highlights the specifics (cancer, heart attack, stroke, etc), the fear suddenly becomes real. The insurance agent has painted a picture in the person's mind of a specific scenario that could happen to him in the future.

Funny isn't it? Our mind (and ears) sometimes do play funny tricks on us.

The author is really amused that humans often fear the specifics more than the general even though the general could include the specifics. (Hope that does not confuse you). However, he too finds himself falling into this trap.

NTUC I-Term Policy: The Cheapest in Singapore?

I was alerted by a reader of my blog that Aviva's SAF Group Term Policy might not be the cheapest around in Singapore. In fact, he pointed out that Philips Capital was selling some term insurance on its site. So I did a check and realised that he could be right afterall! The policy is actually called I-Term and is underwritten by NTUC Income and distributed by Philips Capital.

I had bought Aviva's SAF Group Term Policy some years back. Looking at the NTUC I-Term Policy now, I think that it is indeed a competitive product that might be much cheaper than other term policies around. Please do your own research as this is just based on my gut feel and opinion.

NTUC I-Term Policy

NTUC's term policy is a pure protection plan that provides coverage for death, total permanent disability and terminal illness. Terminal illness should not be confused with critical illness. Suicide is excluded for the first year of coverage. For TPD, the payouts are over a period of 5 years (10% for the 1st 4 years and the remaining 60% on the 5th year). This is pretty common amongst all insurance plans.

For a male of 30 years of age (non-smoker), a coverage of $100,000 will cost only $9 per month for a 5 year term and $13 per month for a 20 year term. As such, it does seem that the premiums are much lower than Aviva's SAF Group Term Policy! In addition, the premium rate is guaranteed for the term of the policy. That means that the premiums you will pay are guaranteed based on the number of years you are covering for yourself. Based on the website, you can choose between a 5 year up to a 35 year term of coverage (in increments of 5 years).

In fact, a Business Times article on August 2006 reported that I-Term was the cheapest term policy around then. I am not sure whether it is still the cheapest around in the market today.

No Minimum Entry age and Max Entry Age of 74yrs old (age last birthday)

I-Term has no minimum entry age. This means that a baby can be covered from as young as 1 year old. The maximum entry age is 74 yrs old.

A Quick Analysis

Based on first glance, I-Term indeed looks to be a value for money term insurance policy offering high coverage for low premiums. Unless someone corrects me, I would like to think that this is the cheapest term insurance I know of in the Singapore market today. Thanks to my reader for giving me the heads up on this cheap term insurance plan!

What I like about this plan is basically how it is competitively priced and how it offers a variety of terms for coverage. If I were to switch to this term insurance, I will most likely opt for the 35 year term coverage. In terms of monthly premiums, it might be cheaper than the SAF Group Term Policy that I have. In addition, it will be guaranteed renewable.

Aviva's SAF Group Term Policy provides rebates each year that help to make their term plans even more competitive when you take into account the rebates. For example, I have received this year's rebates of up to $100. So comparing premiums wise, it is a close fight between these two term plans. Nevertheless, I still think that for the benefits provided, the I-Term is rather competitive for its pricing. As my SAF Group Term Policy is lumped together with other critical illness and personal accident coverage, it is difficult for me to do an apple to apple comparison and decide whether it is truly worthwhile to switch plans at the moment.

If there is any NTUC income agent reading this blog, do let me know what the premiums are like for critical illness coverage and personal accident coverage. Who knows, I might even purchase the policy from you! =)

TM Asia Life Policy

I have an insurance policy with TM Asia. To be exact, it is a whole life policy with a plan name that is called Asia Life Plus. My parents bought it for me when I was 16 and I have been servicing it after I started working.

Recently, TM Asia declared that yearly bonus again for participating whole life policies and even though the returns on the par fund for 2009 wasn't fantastic, the bonuses declared were not reduced. TM Asia has never cut their bonus for the past 10 years. At least that is what I have heard.

After receiving the annual bonus statement, I decided to call the customer service centre for a benefit illustration of my policy. I just received the benefit illustration today.

Do note that since this policy was bought by my parents and handed over to me, I never did any comparisons with other companies then. While many people have never heard of TM Asia, it is actually quite a big company though it is relatively unheard of in Singapore. Its tied agency force is also very small as it tends to rely on IFAs to distribute its products.

A Quick Analysis

I am currently at Year 12 of my policy year meaning that I (and my parents) have paid 12 years of premiums worth a total of $22,204.80 for a coverage of $160,000 for Death and TPD. There is no critical illness coverage in this policy.

Based on the current surrender value, it is $11,200 (Guaranteed) and $4,357 (Non-Guaranteed). That adds up to a total of $15,557 in surrender value provided that the non-guaranteed component is accurate.

The bonuses become guaranteed additions to the sum assured once they are declared.

Terminal bonus on death and maturity

TM Asia whole life policy has the following feature:

Below 10 yrs : 0%
10 to 14 yrs : 25%
15 yrs: 50%
16 yrs: 100%
17 yrs: 150%
18 yrs: 200%
19 yrs : 250%
20 to 24 yrs: 300%
25 to 29 yrs : 400%
30 and above : 500%

This basically means that the non-guaranteed component for death or maturity of the policy starts to increase as the policy years go by. As my policy is only 12 years old, whatever bonuses that have been declared are still subject to 25% payout only. That means that if $10,000 in bonuses have been declared, the non-guranteed component payout is only $2,500. This bonus chart stated above relates only to claims during death and maturity (policy year 99 I am guessing). So I guess it is not really meaningful to me unless I die or I live past the age of 99.

Terminal bonus on Surrender

To add to the already confusing policy, there is another table that shows how the terminal bonus for surrendering the policy works out.

It states: "Terminal bonus on surrender as percentage of attaching bonus is illustrated from the end of 19th year onwards if applicable."

19 year: 125%
20 to 24 yr : 300%
25 to 29 yr: 400%
30 and above: 500%

Basically, at the 20th policy year ( meaning after 19 years of paying premiums), I can expect to see a big jump in the non-guaranteed component of the surrender value. This is illustrated in the benefit illustration where the non-guaranteed surrender value jumps from $8,464 to $20,858 during the 19th and 20th policy year respectively. At the 21st policy year, it almost doubles again to $42,057.

Conclusion

I have had thoughts of surrendering this policy but decided against it as I wanted to wait until the 20th policy year before making any decision. In any case, this policy serves as a good protection and savings plan for me. I know many people will recommend the proverbial Buy Term Invest the Rest mantra but this has worked well for me thus far. While it does not have Critical Illness coverage, I still have my coverage from other policies.

Many IFAs have also touted TM Asia's whole life policies as being one of the most competitive in the Singapore insurance industry. I am not sure how true that is. The only thing I know is that in terms of bonus declaration, TM Asia has been able to pay out a constant bonus over the past 10 years. Dollar for dollar and coverage wise, I would like to think that other companies might have even more competitive plans that provide better coverage at a lower premium. In fact, I think many of the whole life policies now are rather similar and competitively structured. Insurance companies often review their products so that they become better than their competitors.

Cheapest Term Insurance in Singapore?

Some years back, I purchased a term insurance under the SAF Group Term Life for me and my wife. The consideration back then was affordability.

Just for information, term insurance has the following features:

1. Cheap in premiums compared to whole life policies and investment linked plans (ILPs)
2. High Coverage.
3. Pay and Throw Away. You don't get any returns from it. It is a pure protection plan.
4. Provides coverage only for a term (usually up to age 70) compared to 99 yrs for whole life and ILPs.

Aviva SAF Group Term Life

I have not really done any comparisons but I am pretty sure that this must be one of the cheapest term insurance.

For my case, I pay $51.72 per month for $100,000 coverage for death, total permanent disability, critical illness and personal accident for both me and my wife.

In addition, I just got a letter 2 days ago that says a rebate has been given. This rebate is worth around $106 and will be credited back into my bank account. This rebate is calculated annually and is based on the actual claims experience of the insurance company for the group policy.

So with the rebate factored in, the term insurance only costs me $250 per pax per year for $100,000 coverage. That is really cheap and works out to be around $20 per month for each person.

Do you know of any cheaper term insurance than the SAF Aviva Group Insurance?

===============
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• Buy a 2nd Property or REITs?

Real Estate Investment Trusts (REITs)

• What are REITs?
• Buy Property or Invest in REITs?
• Why Invest in REITs?
• Singapore REITs - History and Regulations
• Income Investing - REITs
• REITs trading below Net Asset Value

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• Buy Silver in Singapore
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• Can You Trust Your Financial Planner?

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• #3 - Spend Less Than You Earn
• #4 - Spend Less Or Earn More
• #5 - Buy Assets Not Liabilities
• #6 - Read and Learn More
• #7 - The Magic of Part Time
• #8 - Health Equals Wealth
• #9 - It's a Marathon, Not a Sprint
• #10 - Congrats! You have Achieved it!

Prudential to takeover AIA. What will happen to AIA policyholders?

I just read the news that Prudential will takeover AIA for US$35 million dollars. And I have a policy with AIA!!

Given this scenario, what will happen to AIA policyholders?

Will AIA still exist as a company or will all existing policies be taken over by Prudential?

I would like to think that AIA will soon stop existing as a company and that Prudential will just take over all existing policies in due time. This will be the most efficient way to run the business if I were the CEO.

Sometime back, Manulife bought over John Hancock and all policies were taken over by Manulife. John Hancock (JH) simply ceased to exist as an entity in a certain sense as you do not see any new JH policies or any JH agents around here in Singapore.

What do you think?

Is ILP a time bomb?

So I read Lorna Tan's article on investment linked plans (ILPs). (This was posted on another blogger's blog)

Then I saw this adword advertisement by Wilfred Ling that reads: "Is ILP a Time Bomb."

I guess the argument goes as this:

As one ages, the insurance charges creeps up slowly in an ILP. Up to a certain age, the insurance charges might be much more than the premiums one is putting in.

YES IT IS A TIME BOMB!!

If you do not know what you are doing with an ILP, I guess it is a timebomb. Afterall, MAS has recently announced that it wants a stricter environment to guide the sales of ILPs to commoners. Insurance agents would have to make sure that clients who buy ILPs have the necessary education levels or experience in investing before they can buy ILPs. Great move if you ask me. (But isn't the reason why ILPs were created being that people have no idea how to invest their own money...that is why they chose to buy the ILP in the first place!)

An ILP is a time bomb and you much watch the timer very closely. Make sure that you know what are the annual charges for insurance ESPECIALLY once you cross certain ages like 40, 50 or 60. If there is a need, decrease your insurance coverage. Afterall, your insurance coverage requirements should drop as your children become financially independent and leave home.

Some people might not hit the time bomb as they might have already drawn out all their money for retirement purposes or decrease their coverage correspondingly.

No, it's not a time bomb =)

This is me saying it cooly with a swagger. I always feel that if you know what you are getting into, it is not a time bomb.

Afterall, most investments are bombs on timer mode. It can be your stocks, REITs or landbanking.

You need to watch that bomb closely and make sure you release it before the bomb explodes in your lap. As someone said: "Watch your basket closely..."

A stock listed in the stock exchange might be de-listed after the directors run away (think China Print and Dye listed on the Singapore Stock Exchange). REITs might also go bust anytime if they are not able to borrow money.

The fact is this:"Every investment bears a certain risk, even putting your money in a bank involves certain risk"

So What is The Alternative?

So if ILPs are really time bombs, what other alternatives do people have to protect themselves?
What are the alternatives?

I have listed down a few alternatives:

1. Term insurance
2. Endowment plans
3. Whole Life plans

Well, all these instruments are also time bombs if you look at them closely. So the best thing for one to do is to watch your bomb very closely.

Maybe that's why we used to play the pass the parcel game at birthday parties last time.

AIA Achiever - Good or Bad?

In my previous article, I compared an endowment plan with an ILP. Many might think that an ILP is a silly way to save for my child's education. After all, there are much superior ways like "Buy Term Invest the Rest".

Today, I will share with you my personal experience with one ILP that led me to be a little more accomodating towards ILP amidst the anti-insurance stance taken by most people.

AIA Achiever

I bought the above mentioned plan some years back. I believe that it is no longer in the market. Some insurance agent sold it to me as an investment plan and conveniently left out some important details about the "downside" of this policy.

Anyway, for the first few years, I hated the plan. I thought that it was the worst plan that I could have gotten. Afterall, I had to pay premiums for 7 years before I could withdraw the amount out. (When I bought the plan, I thought that I could withdraw the money out once the policy has been incepted for 7 years)

I was really thinking of surrendering the plan very early on as I felt that the 7 year waiting period was simply too long and I could put my money to better use elsewhere. However, the high surrender charges before 7 years made me think twice.

In the end, I continued servicing the plan and recently, I just crossed 7 years of premium payment.

What I Like About Achiever


Now that the 7 year waiting period is over, I have discovered that I actually do LIKE this ILP. When I look at the amount of money inside, I am amazed that 7 years of consistent saving have actually yielded me with results that I am quite pleased. I took up this plan as a means to fund my retirement. It has served me well thus far and the actual cash value is much higher than that shown on the benefit illustration for 9% compounded annual returns.

In addition, I get to log into AIA eCare easily to check on my monthly statements and can do my fund switches easily too.

What I Don't Like

It is of course obvious that there are aspects I do not like about the plan. Here are a few:

1. Policy charges every month.
2. Supplementary benefit charge based on face value of policy. This is payable for 10 years.

However, when I consider this to any endowment plan or whole life plan, I find that it suits my overall portfolio very well. It gives me the necessary protection and savings.

Would I have done things differently now?

I am still torn between the "Buy Term Invest the Rest" strategy and the other whole life approach.

If I had bought term insurance and invested the rest using something like the Share Builder's Plan by Philips Capital, I might have gotten higher returns. I might also have gotten worst returns.

If I could turn back the hands of time, I seriously do not know whether I would have bought this plan.

I know many people have complained about the bad returns or low surrender values from their ILPs. I am perhaps the minority that have actually sticked through with my ILP instead of surrendering it. As such, I now see the "fruits" of my labour. It gave me a disciplined way to save for my retirement and gives me protection as well.

Insurance Portfolio for 2009

After reviewing my stock portfolio for 2009, it is only right that I also review my current insurance portfolio and the changes that I have made for me and my family.


Currently there are 3 members in my family. We are covered under the following insurance plans:

Myself
1. Aviva MyShield Plan 1 (Covers hospitalisation)
2. SAF Group Term Insurance ($100K)
3, AXA Future Protector ($200K)
4. AIA Achiever ($100K)
5. Manulink Flexi ($200K)
6. TM Asia Whole Life ($160K)
7. Dependent Protection Scheme ($46K)

My Wife
1. Aviva MyShield Plan 1
1. SAF Group Term ($100K)
2. AXA Future Protector ($200K)

My Kid
1. Aviva MyShield Plan 2
2. Manulink Flexi ($100K)

I figured that this is the best that I can afford for insurance for 2009. I have covered myself for close to $800k while my wife is covered for $300K). My son is covered by a hospitalisation plan as well as an ILP which serves for both protection and as a savings for his education.

If possible, I would like to increase my wife's coverage as well as my son's coverage. But all these will have to wait till I get a higher pay =)

How much are you insured for?

Leaving Assets For Future Generations

I got into a talk with one of these financial planners lately. The topic we talked about was basically insurance and how one could virtually give one's child/children a good inheritance.

The idea might sound warp but it is worth thinking about. Basically, it involves you just buying a whole life insurance and not drawing that money out/surrendering the policy/or letting it lapse.

As death is certain, you can be assured that your beneficiaries will receive whatever amount is the sum assured on your life as well as any accumulated bonuses. So perhaps for a total price of $100,000 over say a period of 25 years ($4000 per year), you are able to pass over quite a sizeable fortune (maybe $0.5 million) to your child/children when you die. That is of course if you do not surrender the policy or anything before your appointed time with the Maker.

Just food for thought =)

By the way, I added another 200k insurance which brings my total insurance to $560k life coverage.

Have updated my adsense earnings for the month of March here.

Optimising and Updating Your Insurance

What should one do during this global financial crisis when stocks are down and the market is just so moody? Well, one good thing to do will be to re-look into your insurance policies and find out whether you have them optimised or updated.

What do I mean by optimised? It means to find out whether you can find a plan that is cheaper than any existing plan you have so that you can replace your current plans. Updated means to take into account the recent developments in your life (new addition to the family, etc) and see whether you are sufficiently covered.

Below is a list of my insurance policies and the premiums that I am paying for them. Feel free to compare and do let me know if you have a cheaper insurance plan than me =). Of course, those with the higher premiums provide money back and those that are dirt cheap are the term insurance which are basically pay and throw away kind of plans.

Death and TPD

1. AIA Achiever ($100,000) - $350 per month (Investment Linked)
2. Asia Life Junior Life Care Policy ($160,000) - $150 per month (Surrender Value present)
3. Aviva SAF Group Term Insurance ($100,000) - $12.80 per month (Pay & Throw Away)

Critical Illness

1. Aviva SAF Group Insurance Living Care Policy ($100,000) - $10 per month (Pay & Throw Away)

Personal Accident

1. Aviva SAF Group Insurance Personal Accident Policy ($100,000) - $4.17 per month (Pay & Throw Away)

Hospitalisation (without rider, means must pay deductible and co-insurance)

1. AIA Healthshield - $111.30 per month

Disability Income

1. Nil

Home Insurance

1. AIG Home Assurance

The coverage details are as follows:
Coverage Descriptions Limit (SGD)
Building = $150,000
Alt Accomodation Expenses = $4,500
Household contents = $30,000
Contents at Temporary Premises =$4,500
Replacement of Locks & Keys = $250
Personal Accident (<66 age="" br="">Medical Expense (<66 age="" br="">Third Party Personal Liability = $500,000

2. Home Protection Scheme (HPS) by HDB

Pays off housing loan that is owed shd anyone pass away.

Home Insurance

No financial planning is complete without insurance. I would be adding in details of the various insurance that I have.

Let me start with my home insurance.

Since I am using my Central Provident Fund (CPF) for my monthly housing installments, I have to be covered under the Home Protection Scheme (HPS). HPS gives me protection up to age 65 or to the end of the loan period, whichever is earlier. In the event of permanent incapacity or death, the Board will pay up the outstanding housing loan so that my family can keep the flat. That is if my loan is 100% covered for. So for an annual premium of $200 to $300, my outstanding mortgage loan is covered should anything untoward happen to me. Isn't that wonderful planning by the government!

If you have a private life or mortgage reducing insurance which is sufficient to cover your outstanding housing loan, you may apply for exemption from HPS. The above also applies if you are paying the housing instalments under PHS. HPS is optional only if you use cash to pay your monthly housing instalments.

Apart from HPS which covers my mortgage loan should any untoward happen to me, I am also covered by AIG American Home Assurance Company.

The coverage details are as follows:
Coverage Descriptions Limit (SGD)
Building = $150,000
Alt Accomodation Expenses = $4,500
Household contents = $30,000
Contents at Temporary Premises =$4,500
Replacement of Locks & Keys = $250
Personal Accident (<66 liability =" $500,000" style="FONT-WEIGHT: bold">S$81.00 per year.

In conclusion, I think my insurance coverage for my home is pretty well covered. The only way that I can improve the coverage is if I am able to find another insurance that provides the same coverage but at a lower cost (i.e. less than $81.00 per year)

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