Choosing Between MINDEF SAF and Regular Term Life Plans

This post was originally posted on Planner Bee.

Is there a right plan for everyone?

Life insurance is an essential part of financial planning, offering protection to ensure your loved ones are supported during unexpected circumstances. However, choosing the right life insurance plan can sometimes feel daunting.

For Singaporean servicemen and servicewomen, the MINDEF SAF Group Term Life Plan stands out with its competitive premiums and tailored coverage. But is it the best option for your specific needs? Let’s explore the key differences between the MINDEF SAF term life plan and regular term life insurance to help you make a well-informed decision.

What is term life insurance?

Term life insurance provides coverage for a set period, known as the “term,” which could be 10, 20, or 30 years. If the insured passes away during this time, the insurer pays the agreed sum assured to the beneficiaries.

If the policyholder outlives the term, there is no payout, and the policy ends. This straightforward structure makes term life insurance an affordable choice for many.

Optional coverage can be added to provide coverage for total permanent disability and critical illness too.

Read more: Term Life vs Whole Life Insurance: Which Should You Get?

What is MINDEF SAF Group Term Life?

The MINDEF SAF Group Term Life Plan is a group insurance plan created for Singapore Armed Forces (SAF) personnel. It covers regulars, full-time National Servicemen (NSFs), NSmen, and their dependents. Managed by Singlife (formerly Aviva) and administered through MINDEF, the plan offers term life coverage at affordable premiums.

What are the key differences?

Both MINDEF SAF and regular term life plans provide essential coverage, but they differ in features, flexibility, and coverage. Here’s a clear breakdown:

1. Group plan vs individual plan

MINDEF SAF: This is a group insurance plan. The terms and benefits can be adjusted for the entire group by the insurer or the organisation managing the policy.

Regular term life: These are individual plans with fixed terms and benefits. Changes cannot be made without the policyholder’s consent.

2. Coverage amount and maximum coverage age

MINDEF SAF: Offers coverage up to S$1,000,000, depending on individual needs. The maximum coverage age is 70.

Regular term life: Coverage typically ranges from S$100,000 to S$2,000,000 or more, depending on the provider. Coverage can last for renewable terms (e.g., 5 or 20 years) or up to a specified age, such as 65 or 85.

3. Critical illness (CI) and early critical illness (ECI) coverage

MINDEF SAF: These are add-ons to the Group Term Life (GTL) plan, with premiums that rise as you move into higher age bands.

• Living Care: Covers 37 severe-stage critical illnesses.
• Living Care Plus: Adds coverage for 10 specific early-stage critical illnesses.

Regular term life: Offers more comprehensive critical illness coverage, either as standalone policies or optional riders. Typically covers up to 37 severe-stage critical illnesses and a broader range of as many as 170 conditions under separate riders.

4. Premiums

MINDEF SAF: Premiums are very competitive but increase significantly with age. This is especially noticeable after age 65 for death coverage and after age 50 for CI and ECI coverage.

Regular term life: Premiums are typically higher than SAF terms at the start but remain fixed throughout the policy term.

5. Flexibility and customisation

MINDEF SAF: The flexibility is limited. As a group plan, it doesn’t allow for much individual customisations.

Regular term life: It offers more flexibility, allowing you to adjust coverage amounts, riders, and term lengths to suit your needs.

6. Medical underwriting

MINDEF SAF: No medical check-up is needed for coverage up to S$300,000 if you apply within 30 days of enlistment or employment.

Regular term life: It usually requires health-related questions or medical underwriting, especially for higher coverage amounts.

How to decide?

Now that you understand the differences between these two plans, what factors should you consider when making your decision? Here are a few things to keep in mind:

1. Affordability

If cost is a key concern, especially when you’re younger, the MINDEF SAF plan is an affordable option. However, keep in mind that premiums will increase with age, particularly for CI and ECI riders.

2. Coverage needs

Think about your financial responsibilities and how much coverage you need. If you require more extensive CI or ECI coverage, a regular term life plan might be more suitable. The number of ECI conditions covered for regular term life plans is much more extensive too.

3. Long-term planning

For coverage beyond age 70 or if you prefer stable premiums over time, a regular term life insurance plan offers more certainty and flexibility.

4. Customisation

Consider whether you need additional riders, like a waiver of premium or accidental death benefit. Regular term life insurance generally offers more options for customisation.

5. Employer dependency

MINDEF SAF plans are linked to your organisation, whereas regular term life insurance is independent of your job. This makes regular plans a better choice for those seeking continuity.

Read more: 10 Common Life Insurance Myths Debunked

Closing note

Both the MINDEF SAF Group Term Life Plan and regular term life insurance plans are effective, but they cater to different needs. If you’re a SAF personnel or a dependent seeking simple, affordable coverage, the MINDEF SAF plan is a good option. On the other hand, if you want long-term and more comprehensive coverage, a customised regular term life plan may be worth the higher cost.

The right choice depends on your financial situation, coverage needs, and future goals. Take the time to assess your needs and consult a financial advisor if needed to find the plan that best fits your priorities.