I am a fresh graduate who is buying whole life insurance from Manulife. I am looking to pay annually, but am not sure whether to pay the premium for 10/15/20/25 years. What do you suggest?

Never buy whole life insurance as you are paying alot for insignificant coverage

Hey Anon!

I was actually asking my insurance agent (Prudential) about this yesterday. He says that 25 years is usually a good choice for fresh grads because the premiums are more within our means (10% of monthly income) and at the same time, we will finish paying it before we retire (e.g. if you're 25 now, you will finish paying at 50) so it doesn't eat into retirement years.

But yeah you're right that paying within a short term decreases the cost of premium, but same time also reduces your potential to invest. If you really want to calculate the numbers, I guess you could weigh the cost savings from your premiums against potential investment returns (based on your usual investment portfolio) to see if it's worth it for you.

Hope this helps!

Apart from total premium for the entire payment period. Do also consider that if you make valid claims earlier, the total premium may be lesser. For example, a payment plan of 25 years may be cheaper than a payment plan of 10 years if you make claims early.

Primarily do consider the affordability.

The total premium for a shorter payment period is less , as the effect of the time value of money is factored in the premium pricing.

Paying over longer period of time improves cash flow, if your free cash is invested wisely.

I usually prefer a longer payment term if there's a premium waiver option.

You definitely should have a good discussion with your financial planner to decide.