As we begin a new year (hello, 2023!), many of us start thinking about what we want to achieve in the months ahead, including our financial goals.
Whether it’s to be better at managing our spending, finding other ways to grow our savings and investments, or just wanting to achieve FIRE (Financial Independence, Retire Early), one thing that shouldn’t be overlooked is protecting your finances too.
That’s where insurance comes in — it’s a key way to protect not just our finances but also our loved ones’ too should we be suddenly unable to provide for them.
According to the Life Insurance Association Singapore (LIA), the mortality protection gap among working adults is 2.1x annual income after allowing for insurance and savings. The mortality protection gap is defined by LIA as “the shortfall in the amount of money you should be providing to meet the financial needs of your family in the event of your death”.
However, as we know, higher coverage usually means higher premiums. That’s where term life insurance comes in.
Term life insurance, unlike whole life insurance, provides protection for a fixed duration, but can also be extended to cover up to 99 years old — just like a whole life policy. This way, you are still assured a payout if you die or become permanently disabled before the end of your term. It just doesn’t have the cash value component like a whole life plan does.
But how well do we know the capabilities of a term life plan? Using insurer Singlife’s plan, the Singlife Elite Term as an example, here are 5 cool things this term life insurance plan can do that benefits us!
1. Lump-sum payout
An essential component of any life insurance plan, a lump-sum payout is the most important factor you should be looking at when comparing term life plans.
With Singlife Elite Term, the term life plan pays a lump-sum payout if the insured person dies or is diagnosed with a terminal illness.
Yes, we know this is typically standard for term life insurance plans. But what Singlife Elite Term offers is a generous amount of lump-sum payout compared to the premium paid. One can add riders to the plan as well — a rider gives additional protection against risks on top of the benefits of a basic plan. It’s optional and comes at an additional cost.
Here’s a brief example:
As you can see from the table, the insured person (Sam) is covered till 99 years old Age Next Birthday (ANB). Let’s say he is a non-smoker and was 35 ANB when he bought the policy, and died at 88 ANB.
The total premiums they would have paid would have been $298,042.20 (based on $5,519.30 annual premium x 54 years, assuming they paid the premium at age 88). Their family still gets the payout of $1 million, more than 3x of what was paid.
Note: Premium includes 30% premium discount on all the plans listed. Promotion terms and conditions apply. Total premiums paid as at 88 years old assumes that premiums are paid on an annual basis and the last premium is paid on the policy anniversary after Sam turns 88 years old.
2. Wide range of cover duration to choose from
Each of us has different circumstances and family situations, which would mean requiring coverage for a length of time that’s most suitable for us. To accommodate different needs, Singlife Elite Term offers a wide range of cover duration you can choose from.
You can choose a coverage period of 5 or 10 years, or any yearly interval from the 11th year until you’re 85 ANB. Singlife will automatically renew your coverage if you choose the 5-year or 10-year coverage term.
This is known as a Guaranteed Renewable Option (GRO), and is subjected to a maximum renewal age of 75 years old and the maximum expiry age of 85 years old. It’s only applicable to 5- and 10-year policy terms.
You can also choose coverage of up to 99 years old ANB. If you choose this coverage term, it means that you will be protected beyond your working years, and by extension, are also able to protect your loved ones. Should you die before the retirement age of 65 ANB, your loved ones will receive the payout to help with expenses.
Another way to look at it: For someone who dies at a ripe old age, say in their 90s, the plan can also serve as a legacy gift of love to the ones they leave behind.
3. Hitting a life milestone? Your basic coverage can be increased
Whether you’ve just gotten married, landed your first job, bought your first house or had your first child (or second child), every new milestone you hit in life may mean you need to make changes to your insurance for additional coverage.
With Singlife Elite Term, you have the option to increase your basic policy coverage* without going through the hassle of medical check-ups when you reach such key milestones in life.
For instance, if you’ve just had your first child, you can increase the sum assured of your basic policy to 50% of your current sum assured, or up to S$500,000 per life, whichever is lower.
*Extended to standard life only, in which “standard life” means: “A life assured that Singlife accepted at standard terms without any substandard premium loading, exclusions or counter-offers when the policy is issued.”
4. It can be converted
Yes! Singlife Elite Term allows you to convert your term life insurance plan into a new endowment or whole life plan — without further medical underwriting.
This means there’s no hassle of the insurer checking your medical history or making you go for medical check-ups when you convert your policy. Best thing: You’ll still be covered!
You have to be 65 ANB or younger for this to happen though, and must not have previously submitted any claim on this policy.
Not convinced? Here’s an example:
Imagine when you just reach 65 ANB, your kids are all grown up and financially independent. There’s not much need for you to provide for your dependants. You can then convert your policy to an endowment plan so that you can accumulate more savings to grow your retirement nest egg.
You can also choose to convert to a whole life plan, where you still get to enjoy the protective benefits of the plan, plus accumulate cash value (both guaranteed and non-guaranteed bonuses). At the same time, the plan serves as a legacy gift for your loved ones with the full benefit payout no matter what age you die.
5. Serve as a foundation for riders for holistic coverage
Need more coverage even after getting your Singlife Elite Term plan? There’s a choice of riders for you to consider. The 7 riders that can be added on to the plan are:
- TPD Advance Cover Plus II
- CI Advance Cover Plus III
- MultiPay Critical Illness Cover IV
- Early Critical Illness Cover II
- Critical Illness Premium Waiver II
- Payer Critical Illness Premium Waiver II
- Payer Premium Waiver Benefit
The case for critical illness coverage
Remember the protection gap report by LIA? For critical illness coverage, the average working adult needs 3.1x their annual salary to close this protection gap.
In Singapore, critical illnesses such as cancer and heart diseases remain the top causes of death. The National Cancer Centre Singapore reports that 80,753 cancer cases were reported in Singapore from 2016 to 2020. This makes it an average of 44 people diagnosed with cancer every day in the same period, according to the Singapore Cancer Society.
And once you get sick, you know that it’s not just your body and health that suffer, but your bank account could also take a massive hit for medical fees, treatment, post-recovery rehabilitation, buying of medical equipment and so on.
Of course, critical illnesses like cancer and stroke affect one’s ability to provide for their loved ones and keep up with insurance premiums especially if they are unable to work for an extended period of time.
With these considerations in mind, having the option to add various riders to your plan sure gives some relief.
Bonus: You get some discounts thrown in when you sign up for Singlife Elite Term!
From now till 31 March 2023, here’s what you get when you sign up for Singlife Elite Term:
- $50 e-voucher when you complete a holistic portfolio review (simply leave your contact details on the Singlife Elite Term page and our Singlife Financial Advisor Representatives will contact you to a financial needs analysis to ensure you’re sufficiently protected)
- 30% perpetual premium discount on Singlife Elite Term and eligible riders
- additional $100 e-voucher when you purchase Singlife Elite Term (on top of the $50 e-voucher)
Find out more about Singlife Elite Term to get ahead on your financial goals this 2023 and beyond.
All ages mentioned refer to age next birthday.
Terms and conditions apply. This policy is underwritten by Singapore Life Ltd. MoneySmart Singapore is not an insurance agent/intermediary and cannot solicit any insurance business, give advice, recommend any product or arrange any insurance contract. Please direct all enquires to Singapore Life Ltd. This material is published for general information only and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person. You should read the Product Summary and seek advice from a financial adviser representative before making a commitment to purchase the product. As this product has no savings or investment feature, there is no cash value if the policy ends or if the policy is terminated prematurely. Buying a health insurance policy that is not suitable for you may impact your ability to finance your future healthcare needs. This advertisement has not been reviewed by the Monetary Authority of Singapore. Protected up to specified limits by SDIC. Information is accurate as at 8 February 2023.
This post was written in collaboration with Singlife. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.