[23M] Should I opt for Term Life or Whole Life Insurance considering the difference that I can invest myself?

Both have similar benefits with ECI+CI+TPD until 70
Whole Life: 8k/year, 200k base 5x, 20yr
Term Life: 3k/year, 250k 3x, multipay CI

Initially wanted lifetime guaranteed value of Whole Life, but considering the difference, I calculated that investing the 5k over 47 yrs vs 8k over 27 yrs would give much more even with just 5% interest

Should I go with Term Life instead?

Note: Based on 10x annual income suggestion, I think I'm not overinsured (make 100k annually), but please advise otherwise

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Deedee

01 Jan 2021

Not a financial advisor here so just sharing my personal thoughts.

Have read through answers to similar questions as yours and blog posts as well. What I gathered was that you'd need a high ROI if you wanted ECI coverage, not as high if it's just CI coverage.

So it may make sense to get a Whole Life with ECI+CI, of maybe $100k base, 2x. By age 70, your life plan might be able to grow to ~$150k. Right now, LIA recommends $3xxk to cover CI and considering high medical inflation rate here in SG, I would just get a high multiplier too. Oh btw, CI coverage suggested is 5x Annual Income while ECI coverage suggested is about 2x, but of course to each his own.

Death/TPD coverage on the other hand, is suggested to be 10x your annual income. But one would only need such coverage if he has dependents (eg parents, siblings, children) then this coverage would ensure they would be able to regain their footing even in your absence. Also, this coverage should preferably be more than your liabilities combined (think house loan, car loan etc) as you would not want to burden your family when you leave. There is a rough age where you may not need such coverage and so, a simple term plan till age 60/65 for this is good enough. Personally I bought till age 70 to consider possibilities of late pregnancy and also house upgrade :]

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Benjamin Goh

01 Jan 2021

Financial Consultant at Prudential

Hi there! In general it's up to your risk appetite but as a Financial Consultant I have helped clients save money on whole life plans by converting them into a term plan and putting the rest into insurance savings plans.

In general, a term plan is enough to cover you if death, illness or disability strikes and the returns of a whole life plan will definitely be lower than that of an insurance savings plan as they are an income protection product with the bonus of cash value.

I'm happy to help you with this but it is certainly up to you. If my advice makes sense, you're more than welcome to contact me where I can share with you a real life examples of a client with a similar situation to you.

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