Best type of insurance for those in their 40s - 50s

Hi there, getting insurance can be pretty confusing especially when you're not sure which plans are the best. You might find this comparison page useful: it basically sums up and compares the different CI coverages in Singapore.

Hi anon,

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If they are considering CI cover, there are largely two options, a term plan or a whole life plan.

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You'll want to understand they key differences

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Let's start with term plans

• Covers a specific duration, hence the word term
• Premiums are lower as you pay across the entire duration of the plan
• Can be single payout or you may get one that allows multiple claims, which may be helpful if recurrent CI (e.g. cancer) is of concern for them. After diagnosis of a major CI, buying more coverage is often difficult, if not impossible.
• If diagnosis is made, premiums may be waived
• If diagnosis occurs after the duration of the plan, there won't be any payout unfortunately
• No cash or surrender value.
• Payout amount is flat (i.e. whatever you choose) regardless of when the diagnosis happens. If the payout is $300K it is $300K regardless of whether the claim is in 2023 or 2043.
• Can be used to ring fence a large amount of protection for a reasonable cost at the trade off of the coverage duration. Thus mostly used to protect their income earning capability

As for whole life plans with CI riders

• Typically come with a 'multiplier' to boost the coverage during their working years. Eg if you choose a base coverage of $100K for life and a x3 multiplier till age 70, they'll have $300K of CI cover till the age of 70
• Because you don't pay premiums throughout the duration of the plan, and yet the plan has to cover you for life, the premiums get 'compressed' and will be higher. Think of it like paying your house mortgage in a shorter duration, you will pay more but finish paying in a shorter duration.
• Single payout after which the plan ends
• After the multiplier expires, some baseline coverage is retained forever. If one passes away peacefully, there's still a payout on death. Payouts in retirement are not about safe guarding unearned income, but rather preventing erosion of retirement assets as the payout provides liquidity so that they do not need to sell off assets to fund treatment.
• Has cash/surrender value which will be added to the payout (depending on when and which insurer) which means a base cover of $100K could mean a payout of $150K if the claim comes a lot later.

So is there a perfect answer? I'm inclined to think that the best option may be a mix of both, especially if recurrent CI is a concern to them. Of course, combine this with

• Their budget, which ideally should not exceed 10% of their annual income for their individual plans, and this has to cover death/TPD/CI/LTC/Hospitalization
• Their existing coverage, which must also be taken into account (including the comprehensiveness of their coverage, older plans only cover 26 CI for example, and only late stage)
• Their needs. As a guideline on the amount of coverage, 4x annual income coverage is recommended by LIA, and 5x isn't stretching it either.

To fully evaluate the situation.

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As a side note, total premiums can actually be higher for a term plan compared to whole life if the coverage duration is long. So don't be too quick to dismiss whole life plans despite the seemingly high premium.

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Lastly, every single insurer has slight differences in their CI plans and thus they would want to speak with a competent advisor from an independent advisory firm in order to best understand all options (whether term or WL) before they decide what's best for them. Insurance is a relatively long term commitment so options should be carefully considered before applying.

Individual preference, see if they like chicken rice or duck rice

Hi there!

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There are a lot of factors in considering Insurance. Yes, you may look at the benefits of the different types of Life Insurance (e.g. Term or Whole) and it is important for you to know the pros and cons of it. However, at the same time, you do need to know as well the coverages that you currently have so that you will be able to find the gaps and close them up. Also know what are the intentions of getting certain plans.

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In my own opinion, I personally feel that Whole Life has more benefits than Term Life. For your case, to get a Whole Life for someone who is in their 40s - 50s, do prepare to set aside a larger amount for the premiums.

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Do send me a message if you would like to know more about it and I hope this short opinion of mine can give you a little more clarity :)