Term Life Insurance – For Individuals

Term Life Insurance provides insurance protection only for a fixed period of time. There is no savings or investment feature. Therefore, when the policy ends or is terminated prematurely, there is no cash value.

Pros:

  • The premiums are lower than whole life and endowment insurance policies for the same insurance coverage.
  • Able to get higher coverage for the same premiums for whole life and endowment insurance policies

Cons:

  • If the period for the coverage is too short, there will be no coverage after the policy expires.
  • For a new purchase of term insurance policy after the first policy expires, there will be medical or financial underwriting.

5 things that determine term insurance premium

  • The premiums also cost more with age, so it will be increasingly costly to purchase term insurance policies over time.
  • No cash value. Hence, the premium paid for the term policy has no returns.
  • The policyholder have to keep paying premiums for the coverage. Meaning if the term indicate to cover till age 85, premiums have to be paid until age 85. Can you imagine yourself still paying for insurance at the age of 85?

Suitable for:

  • Someone with a low budget but requires some form of protection
  • Someone who requires a higher amount of coverage for a period of time (example: when their children are still young, when their liabilities are high)

Examples of Term Insurance:

  • Dependent Protections Scheme (Covers Death/Total Permanent Disability/Terminal Illness up till age 60)
  • Home Protection Scheme (Covers Outstanding Housing Loan until the loan is fully paid off)
  • Mortgage Insurance (same as Home Protection Scheme, payable in cash instead of CPF. Mainly for Private Property. It can also be used to insure against HDB Outstanding Loan)
  • SAF Term Insurance (Covers Death/Total Permanent Disability/Accidental Death up till age 65, can be extended till age 70, subjected to terms and conditions)

Hopefully, this post will benefit you.

Have a lovely Hari Raya 2016!  🙂

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