Term Insurance in Singapore: What is it, Who Offers it, and How to Choose the Right One for You
What is term insurance?
Many people fear and avoid planning for life after death. However, it is necessary to ensure that you do not leave behind you an extra dose of pain and suffering due to financial burdens. Having a life insurance cover gives your dependents an additional card to play with because they get reliable financial support in your absence. The most common types of life insurance are term insurance and whole life insurance. Unfortunately, people in Singapore confuse the two, and some unscrupulous brokers often take advantage of that.
Term insurance Singapore provides coverage for an exact period. Generally, most covers range between twenty to thirty years. This cover aims to provide your dependents financial support in case you die within that set period. Unlike whole life insurance, term insurance has more affordable premiums mainly because it does not carry any cash value until the policyholder dies. However, term insurance still has a higher payout than whole life insurance. Whole life insurance is structured to last a lifetime while accumulating a steady cash value with time. That is why it’s priced higher at the expense of a smaller death benefit.
Who needs term insurance?
While choosing between term insurance and whole life insurance, people mostly consider how much time they expect to live. They also consider whether they need an insurance product that accumulates a usable cash value or one that all goes to their dependents. With term insurance, there isn’t any investment aspect to worry about. Term insurance gives a straightforward way to only pay premiums and protects their dependents if death comes knocking.
The 20-year term plan Singapore insurers offer is attractive to employed people who do not want an arrangement that locks them in for life. However, having to pay annual premiums for the rest of your life is a big turn-off. In addition, the ever-changing financial conditions also force people to reduce payments that will still exist in their old age. As a result, you should consider purchasing term life insurance if you only want coverage over a precise number of years.
Where to get term insurance in Singapore
You can walk to an insurance office and purchase term insurance but shopping for the covers online is more convenient. Purchasing insurance online help you skip some of the traditional formalities and work as a trick to avoid dealing with agents. In addition, shoppers do not need to worry about their existing government covers because all “Direct Purchase Insurance” plans are linked to the government scheme.
If you want the cheapest term life insurance Singapore has on offer, consider any of these three companies:
FWD ranks among the best for shoppers who want to buy insurance online with minimal steps. The ‘FWD term life’ is a highly recommended cover if you want protection from as low as $50,000 and a maximum of $750,000. The policy protects you up to the age of 85. Consider this plan if you do not need extremely high protection figures. Furthermore, FWB has optional benefits and riders attached to the FWD term life package. A good example is the cancer benefit that can pay the sum assured if you are diagnosed with cancer at any stage of your policy term.
Aviva offers a competitive coverage plan available from $100,000. One unique feature of its coverage is the flexibility to increase the protection amount as your financial fortunes grow. Aside from the five and 10-year plans, Aviva lets you buy a coverage plan for 11 years to 85. In addition, the 5-year and 10-year plans have a clause that allows you to renew your plan without taking a medical evaluation. So, consider Aviva if you want to enjoy many available riders, such as critical illness and permanent disability.
Manulife has annually renewable plans that start from $75,000 and above. You can pick a 5 to a 10-year term and keep it renewable for as long as you want until age 85. The term flexibility options are countless with Manulife because customers can opt for 40, 65, and 75 instead of the traditional 85 years. In addition, the company offers attractive add-ons such as permanent disability and critical illness at fair prices. Clients can also negotiate for premium waivers. For example, smokers enjoy the same premiums as non-smokers for the first three years.
Buying tips for term insurance policies
There is a misconception that term insurance is only valuable if you die. Furthermore, interested buyers think that all people pay the same amount as the premium as long as they are purchasing the same package. However, here are some secrets that help you get the best service from your insurance policy in Singapore.
You do not have to name only one beneficiary! The beneficiary is the person who is nominated to receive your benefits when you die. However, some complications can arise when you have only one beneficiary. Therefore, always add (in a hierarchy) at least two beneficiaries. If possible, allow the insurer to transfer your benefits to your estate.
Age and health
A person’s age and health directly impact how much you pay as premiums. Younger people usually think that life insurance is unnecessary because they have few financial commitments and a long life ahead of them. However, the premium rates you pay will cost more for every year you keep on waiting. Typically, people in their 50s pay more than people in their 40s. Instead of waiting for the insurance premiums to grow, settle on an excellent plan while still young.
There are no thumb rules in purchasing term life insurance, but you need to consider when, where and how much insurance you should buy. Figure out the number of years remaining within which you can comfortably support your family and meet obligations such as mortgages and car loans. With the correct term insurance in Singapore, you can get the protection that will keep you and your dependents covered by their requirements.