Do I really need whole/term life insurance?

Hi H,

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The question is not whether you need term or whole life insurance, but rather, do you need protection for death/TPD or protection for CI?

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The way I see it, paying up your mortgage means you have no more liabilities (presuming no other loans for you e.g. car loan). I presume you are married since you said you have no plan of starting a family (DINK? Let me know if I am wrong). In this case, presuming your spouse is also debt free, then you only need to consider if in the event of premature death, do you want your spouse to have the ability to retirement there and then? Some people do, in which case a term plan may work. Disability income insurance is another thing that you need to look at if you work in a very specialized job.

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For CI, there are many options. The best option for you depends on what you are looking for and how long you want to have the coverage for. In your 40s, the premiums for whole life with multiplier are higher already, but with a decent multiplier amount, you can get quite a good amount of cover. This is probably if you want more CI cover now to protect your active income, and a little lesser CI cover in your retirement to reduce the likelihood of having to tap your retirement funds. If you are fearful of recurrent CI, then get a multipay plan. And if you think you don't want cover after 70, a term probably works better for you.

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I would say that a CI plan is a must for any working person, and if the budget allows, early CI or even multi pay plans can be considered. However, please don't get just an early stage cancer plan, as cancer is but one of the many CI (although it is the most common of the big 3 CIs). There is a still a chance of other CIs occuring so a cancer only plan is probably best bought as supplementary coverage after you have settled your protection against the most common 37 CIs.

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Lastly, please look at your long term care coverage and upgrade if you have not done so. In old age, if something happens to you and you cannot function independently, the payout will be helpful in defraying nursing costs. You are likely on Eldershield, but you will be transitioning to Careshield Life (CSL) in the coming months; adding on a supplementary plan to boost the payout amount is something that should be done while you are still in the pink of health. $600/mth from basic CSL payout is not exactly a lot now, and will be worth lesser in time to come.

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Good luck!

Hi H,

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You can check if you need the coverage from your whole life policy. Not just the death benefit, but TPD as well.

If you decide to surrender it, you can cover the shortfall using a term life insurance and add on a critical illness rider if you want that coverage. An alternative would be disability income insurance that provides payout when you can't work.

Hope this helps!