Life insurance is a sort of insurance that pays out to the insured or their dependents in the event of unforeseen events like death, terminal illness, or total and permanent incapacity (TPD). Term and whole life insurance are the two most frequent types of life insurance.
Life insurance, regardless of the type, can be an important aspect of your financial planning. In this post, we’ll go over some of the most significant components of life insurance and why you should think about getting some protection.
1. Leaving something for your loved ones
Most Singaporeans can leave a quantity of money to their loved ones to help with the rest of the financial strain their family may experience in the future. This sum of money is critical, particularly in the event of an untimely death or illness. Unexpected life occurrences can leave a family financially vulnerable, especially if they have a lot of financial obligations.
As a result, life insurance can assist us in better preparing for the future. When such awful occurrences occur, having a life insurance coverage can provide peace of mind to the insured.
2. You can plan your cash flow with your preferred coverage term
Most life insurance policies allow you to choose from a range of payment alternatives, such as premium payment terms of 10, 15, 20, 25, or 30 years.
Customers can also pick whether they want to pay monthly, quarterly, half-yearly, or annually for their premiums. The objective of offering a variety of payment choices is to accommodate diverse people’s financial situations.
If you wish to increase your coverage, you can do so as well. Most life insurance policies provide such flexibility to accommodate customers with varying financial needs and preferences.
3. You can customise your insurance plan according to your needs
As life expectancy rises and the number of chronic illnesses rises, it’s more important than ever to protect oneself from crucial illnesses. However, according to a 2017 Life Insurance Association Singapore (LIA) Protection Gap Study, Singaporeans have a mortality protection gap of 20% and a critical illness protection gap of 80%.
Death, Total and Permanent Disability, and Terminal Illness are all covered by most life insurance policies. Life insurance plans typically include a range of riders, which are add-ons that may be purchased on top of the base whole life insurance plan for an additional layer of protection. Many life insurance policies, for example, include critical illness riders.
The insurance industry in Singapore generally recognises 37 conditions as critical illnesses; but you should check what the specific policy you’re considering covers.
4. Every penny is worth it knowing that you are well protected.
Whole life insurance premiums are more expensive than term life insurance rates, as is common knowledge. The fact that whole life insurance has a monetary value is one of the reasons for this. You can obtain some monetary value back if you surrender your whole life insurance policy before the coverage period expires.
Furthermore, life insurance is less expensive if purchased while you are young and healthy. The cost of a premium rises with age and the diagnosis of medical disorders.
Life insurance is a type of protection for you and your family. You are covered for the rest of your life if you pay a premium for 15 to 30 years.
5. You should consider buying life insurance while you are still young
Premiums for life insurance are typically lower while you are younger. This is because you are closer to your predicted life expectancy and are therefore less likely to become ill. Premiums are also lower if you do not have any pre-existing medical conditions — if you wait until later in life to obtain insurance, there is always the danger that you will develop a medical condition.
These conditions are typically taken into account when purchasing insurance, and may result in higher premiums or the inability to obtain coverage.
Wondering what policy you should get?
If you’re unclear about the type of life insurance you should buy right now, or the coverage term you should receive, talk to your financial advisor right away to find out which policies are ideal for you.
You may also use this Life Insurance Association calculator to receive an instant estimate of how much you should be protected for based on your financial goal.