A life sentence, parsing ltfs and RMFS, and credit card hot water | Bangkok Post: business

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A life sentence, parsing ltfs and RMFS, and credit card hot water

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  • Newspaper section: Business
  • Writer: Thai Financial Planners Association
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I have had a life insurance policy for six years for savings. Should I cancel it next year or keep it going until maturity at 21 years? I think I can make higher returns with a different investment, but should I be concerned about risk? 

_ MMANSWERED BY...Teera Phutrakul, CFP, Chairman, TFPA Essentially there are two components to a life insurance policy: protection against unexpected loss and an investment component. While there is no one answer to how much protection is enough, one rule of thumb is to buy life insurance equivalent to five to 10 times your annual gross income. That would mean a person making 2 million baht a year should have anywhere from 10 million to 20 million worth of coverage or more.

As for the investment component of your policy, you need to look at the cash value or surrender value, which is the amount available in cash upon cancellation of the policy (usually a whole life policy) before it becomes payable upon death or maturity. If you feel strongly that you can make a better return from another investment than your insurance policy can offer, then go ahead and cancel.

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