Bangkok Bank

[12DrinkMore]

Just came across this

http://www.bangkokbank.com/bangkok%20bank/personal%20banking/bancassurance/pages/gain1st330.aspx

Unless I have totally misread it, they want the punters to put up 640 baht for every 1,000 baht life insurance as an annual premium. So if you go for the minimum 100,000 (obviously not a reflection of how I value my life ) then it will cost you 64,000 / year

Is this for real? Or have I had too many beers and am missing something?

[colinthailand20005]

I am sure you have misread, unless its for the saving return life insurance. Go to BKK bank website, and go to assurance menu, it clearly says how much it is.

[colinthailand20005]

Yes it is a savings return, and it looks pretty good for that type of product, have a look here its much better priced http://www.bangkokbank.com/Bangkok%20Bank/Personal%20Banking/Bancassurance/Pages/PA1st.aspx

[CWMcMurray]

You kinda of have right ... but not quite all of it...

Yes, the premium for 100 k of life insurance for 12 yrs is 64k per yr, but only for 4 yrs (no premiums for yr 5 -12)

At the end of yr 1-6, you would get 5k

At the end of yrs 7-12, you would get 7k

At the end of yr 12, you would get 258 k

--------------------------------------------------

So total premiums are: 256k

Total return: 330k

Which is not so good.... around 2.5% APR

========================================

But if you are working in Thailand and are in the 20% tax bracket, you can deduct these premiums from your taxes....

So 64 * 0.2 = 12.8 k * 4 yr = 51.2 k

So...

So total premiums are: 256k

Total return: 381.2 k

* this is not so bad (better than a CD or B/E)... around 3.86 % APR

=======================================

But if you are working in Thailand and are in the 30% tax bracket, you can deduct these premiums from your taxes....

So 64 * 0.3 = 19.2 k * 4 yr = 76.8k

So...

So total premiums are: 256k

Total return: 406 k

* this is a bit better ... around 4.5% APR

=======================================

But if you are working in Thailand and are in the 37% tax bracket, you can deduct these premiums from your taxes....

So 64 * 0.37 = 23.68 k * 4 yr = 94.72 k

So...

So total premiums are: 256k

Total return: 424.72 k

* this is a bit better still... around 4.97% APR

Edited May 12, 2011 by CWMcMurray

[Pib]

Durn, ThaiVisa has just found an Insurance & Tax Advisor. Very good post CWMcMurray.

Personally I've never found any bank to offer a "low cost" life insurance plan that is truly low cost; usually their plans are on the high end premium-wise and come with a lot of fine print. I expect there are some good plans offered by some banks, it's just I've haven't found one yet. And always remember, if a company says its premiums are competitive that "competitive" usually means their premiums are on the high end when compared to other companies selling a similar product.

[CWMcMurray]

I wanted to try and keep it simple, but in "real life" you could actual see an even better return that advised above.

For simplicities sake, I just added the tax refund to the total out pay... but in reality you will get that refund in yrs 2 - 5 and you could actually reinvest that refund again in something else that would provide a higher return or in something that would provide further tax incentives.

Find and example of what I am talking about below...

For example, lets say that you are in the 30% tax bracket and you take you 19.2 k tax refund for premiums paid and then invest that in a LTF (Long term Fund), this is also tax deductible...

....so the next yr you could get a refund of 19.2k from your life insurance which you rolled over to your LTF and you would then get another 5.76k refund for the previous yrs contribution to LTF, so now you contribute 24.96 k in yr 3...

... yr 4 = 26.68k to LTF

--yr 5 = 27.21 to LTF

--- yr 6 = 8.16k (no more insurance premium but stuill have one more yr on the LTF contribution)

who knows if SET average growth will remain same as last 5 yrs, but lets say they remain at 10% (as current prospectus of Bangkok's LTF for 75% stock 25% Bonds).... at the end of yr 12 that would be around 250k more....

And regardless of the growth rate... it is all good as the only money that was invested was made on contributions from your tax refunds generated by your insurance...

You could even add the yearly 5k and 7k payouts from your insurance to your LTF for further tax benefit and further growth...

If done in this way, you have just used what is relatively safe investment to its fullest to maximize tax benefits to generate a sure 3.86% return with a possible 6-7% return as long as no stock market crash. But even if the market crashes, you still have your 3.86 plus what ever your LTF is worth...

Edited May 13, 2011 by CWMcMurray