I would like to buy my 55-year-old mother a life insurance policy as a birthday present. Please advise.
ANSWERED BY... Teera Phutrakul, CFP, Chairman, TFPA The answer really depends on your angle in all this. If your aim is to win brownie points, buy her a nice diamond ring instead. After all, diamonds are a girl's best friend, so you can't go wrong there.
A life insurance policy as a birthday gift does not sound very attractive to me. It may even send the wrong signal in certain cultures.
Besides, I doubt any insurance companies would take on the risk, especially if the sum insured is big. They will have to assess your mum's "economic value", i.e. how much she earns, longevity risk, etc. Even if they take on the risk, which I doubt, the premium that you pay is not tax-deductible.
A better bet is to buy her health insurance. Most insurers carry what are called "duteous" policies, whereby the children can pay the premiums but the tax deduction is capped at 13,000 baht a year. The first step in buying health insurance is to decide what kind of health care your mother is likely to need. The choice is very much down to what you can afford. Once you've decided on the level of room rates and choice of hospitals and doctors, then you can proceed to select the right health insurance policy.
Three main factors will determine the level of the premium.
- Pre-existing conditions. Did your mum have any personal illness or health condition that was known and existed before the writing and signing of the insurance contract?
Health insurance policies will typically not cover pre-existing conditions until a specified period of time has elapsed.
In some cases, pre-existing conditions may not be covered at all.
- Age. Your mum's age will have a direct bearing on the cost of the insurance premium.
- Gender. Women live longer than men, so their premiums will be higher.
Statistics show that 80% of lifetime medical expenses come during the final two years of life, so health insurance gives you only so much protection. Most people will have to rely on retirement savings to cover medical expenses.
I am nearly 50, the only child of the family, still living with my mother and expect to stay single my whole life. I have a fair amount of savings and I suppose I'll live until at least 70. I'd like to know how to plan for retirement.
PS: How's the living quality in senior nursing homes? Is it really bad?
ANSWERED BY... Teera Phutrakul, CFP, Chairman, TFPA Being 50 and still single is not such a bad thing. As the old saying goes, "Men age like wine, women age like milk". That said, unless you are George Clooney or Pierce Brosnan, you need to keep investing in yourself, not just financially but also healthwise. Ideally by this stage in life you should be in autopilot mode already. Your retirement portfolio should be in the six-to-seven-figure range. You don't need life insurance because you are single without dependents. But you need to make sure you have adequate health insurance.
You probably don't have a mortgage because you are still living with your mum. And being the only child, if you are nice to your mother, your name should be the only one in her will. So when she passes you get everything, including the house you are living in.
The thought of spending your final years alone in an old people's home is not a pleasant one. Homo sapiens is a social animal, and it has been scientifically proved that married couples live longer. In fact, it is becoming quite fashionable these days to be a new dad at the age of 60. I am a new dad myself, and trust me: it's an unforgettable experience.
The bottom line is, if you want to change the course of your life, you have to take that first step. There will be challenges along the way, of course, but no one gets better at anything by simply "trying". As the cliche goes, do it right or do it twice.
The Thai Financial Planners Association is the Certified Financial Planner (CFP) trademark licensing authority in Thailand. It is a self-regulated, non-profit group of financial advisers and experts from various organisations set up to give advice to investors. Questions can be submitted through email@example.com or the TFPA webboard, www.tfpa.or.th
About the author
Writer: Thai Financial Planners Association