ECI Rider for Whole Life?

Hi anon,

If the premium is affordable for you and you also need that amount of coverage based on your needs, then I would do so. So this means that you have looked at your own profile and determined that you'll need $200K ECI payout.

I'm also presuming you are referring to the hybrid term-whole life plan here as only 2 insurers have a pure whole life without a term 'multiplier' add on.

To use Whole Life plans for protection only make sense if you add on the CI or ECI rider (as is the case for you). This is probably one of the best ways to have whole of life ECI coverage, with increased coverage before retirement, and a decent coverage remaining after you retire. If you are age 30 for example, you could have a $100K sum assued Whole Life Plan, with a x2 multiplier boosting your coverage to $200K before age 70. Thus, any payout before 70 would be a full $200K for ECI, and after, you still get ECI cover of $100K plus the cash value of the plan, which would have compounded over the years. Contrast that to a pure ECI term plan, which, if you paid till say, age 70, might cost more in total premiums, and you'll have no coverage after age 70 if you never claim.

For reference, a 30 y.o. taking up a $200K ECI term plan (single payout) would cost $1780 for 40 years or a total of $71200, and coverage ends after age 70. A $100K sum assured whole Life plan with x2 multiplier with a fully accelerating ECI rider costs $3479 for 20 years or a total of $69580 in total. The whole life is actually cheaper and you still retain ECI cover in retirement. Unless the extra $141/mth will make or break your finances, I'd take the whole life plan.

The only thing to consider is that the plan ends after a single ECI claim as you have mentioned. (Then again, so does the term plan). So you'll have nothing left for late CI. However, in this case you could consider not having the ECI rider accelerate the full sum assured, but rather only maybe 50% of the sum assured. The remaining 50% will be accelerated by a late CI rider.

So yes, do treat a whole of life plan with ECI rider as a pure ECI plan but one that covers you for life. So far, the maths has always been in favour of whole life ECI vs ECI term plans, at least for the clients that have asked me for my opinion on their situation. Of course, this is a general answer and to really address your situation will require a more indepth discussion about your needs. But I hope you have gained some insight.

As a matter of fact, if you intend to get insurance coverage for early critical illness only, then it may not worth to use a whole life insurance policy. This is because you will be overpaying for benefits and features that you do not need, e.g. death coverage, participating cash value.

Next, an accelerated rider will usually be cheaper than a standalone rider for a simple reason - the sum assured under the basic policy will reduce after a claim is admitted for the rider. In effect, the insurer's risk is reduced. Hence, the cost and benefit is lesser for you as well.

More Details: What is Critical Illness Insurance Singapore

With this in mind, it depends on how you intend to do your own financial planning. For instance, one question will be: what happens after the initial claim? Given that it is early critical illness, you have a higher probabiltiy for recovery. Thereupon, will you be able to get insurance coverage again?

Since everyone's needs are different, you will need to evaluate on how to plan it so that you will be confident on your decision.

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