Insurance reminder

I was analysing my insurance policies and discussing it with a friend. These are the 3 points I learnt.

a. For life policies, the total costs will be greater than your total paid premium until around your 20th year. If this is the case, if you were to surrender your policy anytime before your 20th year. You will get less than what you paid out.

You could take this loss as coverage for those number of years.

You could also buy term insurance, pay less per year with more coverage offered. The only thing is that you do not get anything back after 20 years of paid premium.

But paid term premiums costs almost half as compared to life insurance premiums with double the coverage.

So in my 20th year, I will have roughly paid out $5000 in term premiums.As for my life policy, I will get $10000 back if I surrender the policy which is actually my total paid up premiums. I don't get anything more from it after 20 years. Just coverage.


b. So term or life? like what my friend said. It depends on what I want out of life. If I am lazy, I will do better buying the life insurance. At least I get money ($10000) back plus coverage.

But if I want to push ahead, then term is the way. It provides more coverage with less premiums and although there is no money back, I will have made more money elsewhere than just the $10000 I put in after 20 years.


c. Endowments/savings

Cons - Premiums are higher than life with the same coverage. The 50% cash jump comes only in your last year. So you will definitely make a loss if you surrender anytime before maturity. You can't be certain what will happen in 20 years time.

Pros - 20years instead of life to get money.

Can I make the money work harder for me? Of I invest the $2000 yearly premium elsewhere. Will I get more than $100k after 20years?