22 Aug 2020
22 Aug 2020
Independent Financial Advisor at Phillip Securities (Jurong East)
I would not recommend the Mindef Aviva Group term with Living Care/Living Care Plus for your long term CI coverage needs. The premiums increase with each age band and you are already 33 ANB. It starts to be a bit expensive in my view after age 40. You can still get it now, but at some point it doesn't look very cost effective. Also, for the living care plus rider, the coverage is rather limited as it only covers around 10 early critical illnesses.
Depending on your budget, you can consider a limited payment life plan or a term plan to cover CI. However, generally the numbers are actually in favour of a Whole of Life plan, especially if you intend to retain LCI and ECI cover in retirement. A multiplier can be viewed as a form of term coverage. In a way, a $100K x2 (till 70) Whole Life CI plan is like buying a $100K whole life plan without multiplier, and stacking a $100K CI term plan that covers you till 70 on top of it. So even if budget is an issue, you may want to consider a lower basic sum assured, but a higher multiplier at least.
If budget permits, then you can combine a whole life (with or without multiplier) with a multi pay (till say, age 65/70) to allow you to claim on the multi pay first if anything happens during your working years, and then fall back on the whole life in retirement.
I'd suggest that you look at all the options available on the market today, as many companies have Whole Life with CI/ECI plans, and multipay plans as well. No two plans will be similar so you will want to know the differences to determine which plan or combination of plan(s) suit you best.
For CI coverage, you can opt for a multi-pay standalone CI plan if you're getting a term plan OR attach a CI rider to your Whole Life plan. If you are looking at a 3-in-1 solution to cover for death, TPD and CI and are looking for cash value towards retirement and for a limited premium payment period, a Whole Life plan is an option. Do note that if you go without the multiplier, it will become more expensive since a multiplier also drops your coverage to base amount at some point.
Term plans are great for hedging against a liability eg. mortgage loan so your partner dont have to tank the liability herself in the unfortunate event of your passing. You'll have to decide with your budget. If you are opting for a term plan, then a standalone CI plan will accompany the term plan well.
If you are looking exclusively for CI coverage, you can look at a multi-pay CI plan. A multi-pay standalone CI plan is generally comprehensive and allows multiple claims for relapses, different CI occurrence etc. Some even waives off your premiums upon diagnosis of CI to keep the plan in force if you're unable to fund it due to sickness. It often covers special conditions eg. Osteoporosis, Rheumatoid Arthritis etc. Some plans even cover pre-early conditions (eg. benign tumours that require surgical excision) and some plans include AIA Power Critical Cover. A multipay CI plan covers exclusively CI coverage and is typically purchased alongside a term plan that covers death and TPD.
Do note that for your CI rider to Whole Life plan, it will generally reduce your death benefit by default since they are Accelerating CI riders unless you opt for Additional Riders. But this is usually quite pricey.
Regardless of which route you take, note that a good coverage amount in general is 5x of your annual income to tide through financially in the event you are unable to work due to a CI occurrence.
Do consult a licensed financial advisor to explore your options. All the best! Financial planning is an integral part of life. You can reach me here to find out more.
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