26 ANB, currently single, with 3 dependents my parents and a younger sibling. Wondering if Term+Ci standalone is better or Term+Ci rider or is there a better combination.

Hi anon,

Let's talk about the types of coverage first, before deciding what type of plans may provide the cover you need.

As you have dependents (and are thus working), you'll need to ensure you hvae coverage in the event of death or TPD. Now, since your younger sibling will eventually grow up and stand on his/her own, and your parents will eventually be no longer around, then coverage for death/TPD is temporary and can be fulfilled via a term plan.

The tricky part comes when we discuss the need to protect your income. At this moment, you are earning the income that your family depends on, if your income earning capability were to stop for some reason, your family will be in a tight situation. So income protection from critical illnesses is something that you'll definitely want to look at. The question is whether a multi-pay CI (term) or a single payout CI (can be term or WL) is more relevant to you.

There isn't really a best solution to this as there is no perfect product.

If you take a term (Death/TPD) plus a CI rider:

• Your maximum coverage duration of the CI rider is up to the duration of the main term plan

• Most CI riders reduce your death benefit if CI occurs first

• Once a payout occurs, you can't claim any more (except for the death portion)

If you take a term + Standalone CI (Can be single payout or multipay or even whole of life)

• You decouple the two plans, so that coverage duration and amount can be independent of each other.

• Any claim from the CI won't affect your main plan since they are seperate plans

• If you take a multipay plan, you can claim again in the event of a second CI, subject to terms and conditions

Weigh the various characteristics and you would be able to decide which would suit you better.

On your question as to whether ECI is bundled with CI, the answer is typically no. Unless you have taken an ECI plan or added a ECI rider or purchased multiplay plan, always presume that CI coverage will refer to late stage CI cover. Thus, you need to make a concious decision to have ECI cover first.

Lastly, while there are very little standalone single payout CI plans, many insurers would have a multipay plan of some sort. However, this does not mean that a standalone CI plan can only be obtained via an ILP. For example, a standalone early CI plan could be Aviva's My Early Critical Illness Plan II, which pays very little benefit on death, but covers for Early till late CI. So I'm afraid the agent is incorrect.

You sounded confused over two things - 1) What is available in the market; and 2) What you need for insurance coverage. Hence, let me try to break it down for you.

The truth about multi-pay Critical Illness plan

Generally, you need to be diagnosed with a Critical Illness condition multiple times in order to 'optimise' the value of your premium in theory. In reality, I always ask myself, "how many times do I want to have a heart attack?"

If once, then my dollar is not stretched to its optimal level.

If more than once, then I'm not sure whether my body can take it or not.

As a matter of fact, a multi-pay Critical Illness plan is likely more expensive than a single payout Critical Illness plan (assuming all factors equal). One reason is because of its wider scope of coverage, e.g. ability to make multiple claims. With this in mind, the question is, "how much more premium should you pay for that second occurrence, if it happens at all?"

Keep Insurance Simple

On the other hand, a single payout Critical Illness plan keeps your portfolio simple - just get one lump sum and the policy terminates. In detail for the same premium, a single pay Critical Illness plan will likely give you higher coverage to that end.

Assuming all things equal, this means that you 1) pay lesser premium; 2) get more payout upfront; and 3) no need to wait for a second Critical Illness to strike.

Now the question is, "Can you manage this additional money properly so that it becomes your second payout, if there is a second occurrence?"

So how?

In truth, there is no right or wrong answer to both types of policies. Instead, this is all about wealth management - how to manage your money to give you a peace of mind, regardless of how many times an illness strike.

As to your agent's claim, no it is not true. There are sufficient standalone Critical Illness plans in the market and it is not necessary to get Critical Illness coverage through an Investment-Linked Poilcy (ILP). In fact, the classic way to get covered is through a level term insurance policy - pay for coverage only.

Overall, I will suggest you to either do more research on your own or to get a referral from your friend and speak to a professional who is willing to listen to you, understand your needs, and to evalaute what you need. In effect, this will give you a clearer picture on what you need, rather than what's available on the market.

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