AIA Secure Flexi Term Insurance?

I have three questions about the AIA Secure Flexi Term Life insurance. 1. May I know what are the differences between the Renewable Term vs Level Term? I would like coverage up till 75 or 100 years old. Hence, should I get the renewable term or level term option and which one will I end up paying more premiums? 2. For renewable option, what are the differences between renewing every 5, 10, 20, or 30 years? Thank you! 3. Will the Early Critical Illness rider premium increase every time I renew?

Discussion (4)

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Elijah Lee

14 Oct 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon.

To answer your questions:

A renewable term (doesn't matter which insurer really) is a term plan with a fixed duration, which renews itself for another similar duration after the first period ends. So a 10 year renewable term will renew itself on year 11 for another 10 year period, with revised premiums. The advantage is that you don't have to do medical underwriting again. However, given the fact that the insurance charges are exponential, the premiums will increase exponentially for the same coverage. Typically the whole plan will renew, including the riders. So just how bad can the insurance charges be? I have a client who had a renewable term with CI from many years ago. She had $140K death/TPD/CI. Her yearly premiums renewed every 5 years and it went from $1.4K to $3K to $6K. Future premiums would be $9K and 15K. A whole life plan covered her for more and it was cheaper too, in total premiums. Unless budget is really a concern, taking a level term policy shouldn't be too expensive and is probably cheaper in total premium costs. Coverage till the time your liabilities end is probably what you will want to aim for, as coverage till age 100 is not cheap, and is more for legacy planning.
Your premiums will definitely vary depending on the duration you choose. Again, you have to see the premium table for your age to know the total cost. Also, bear in mind if you renew when you retire, you must also factor in funding the plan in your retirement years.
Yes. All components of the coverage (rider and main plan) will renew based on the renewal age.

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Pang Zhe Liang

13 Oct 2020

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

For a renewable term insurance, you will be forced to pay a higher premium (based on age) upon its renewal. On the other hand, a level term insurance's premium remains the same throughout the entire policy term. I have explained and illustrated more details here: Types of Term Insurance Policies in Singapore

Since you know that you wish to cover till at least age 75, then a level term insurance policy makes more sense. This is because of the fixed premium over time.

Based on what I am mentioned earlier, a 5 years renewable term insurance means that you will need to renew the policy every 5 years. Obviously you will be older 5 years later. Consequently, the premium will be adjusted according to your age. Now, apply the same concept for the rest of the renewal period.

Generally, a 5 years renewable term insurance policy will be cheaper than the rest of the mentioned option. However, it must be warned that you will likely pay a much higher premium upon its renewal.

All in all, I will suggest for you to understand your needs and do a comprehensive portfolio review. This process ensures that you are paying the right amount of premium and getting the right coverage in return.

I share quality content on estate planning and financial planning here.

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